Yesterday, this column considered the views of Australian gold critics Rory Robertson, Michael Pascoe and David Bassanese, who warned of a growing gold “bubble”. Their views appear largely based on the fact that (1) the price of gold has increased substantially in recent years; and (2) unlike productive assets, gold doesn’t produce a yield or income for investors.
While those views are defensible (especially in the short term), it is strange that Robertson appears to retain a neutral view on housing (claiming in April that he had no strong view on the outlook for housing) while being so pessimistic about gold. Especially since land and gold share a key similarity — both are a hedge against inflation (residential property has historically increased in Australia at slightly more than the general rate of price growth) and neither produce anything of real value to an economy (property can provide a yield to investors though).
Robertson recently wrote a self-congratulatory article for Business Spectator, trumpeting his own foresight in defeating Steve Keen in a bet on housing prices, claiming:
The “bubble crew” seem to keep missing the simple but profound fact that there’s been extraordinarily rapid growth in the number of actual people in Australia with incomes and/or wealth who want to own or rent houses in which to live — as opposed to living in tents and shipping containers — and yet the underlying long-term trend in home-building remains flat near 150,000 per annum. The sheer strength of demand via rapid population growth — alongside very low mortgage rates – has been an obvious upward pressure on home prices.
For Robertson, who appears to consider his own intellect somewhere between Freud and Keynes, one would think he can come up with a better argument for burgeoning property prices than the “population increase” line trotted out by every local suburban real estate agent. Robertson also conveniently ignored the virtual doubling in the ratio of house prices to disposable incomes while giving short shrift to the substantial increase in mortgage levels to GDP, which has risen from 20% in 1990 to almost 90% now.
While Australian population levels have risen recently (and the GFC caused residential dwelling construction to rapidly slow), that is not the key reason for the appreciating property prices. Rather, it is because many (especially young) Australians have used large amounts of debt to pay double for their residence than they ever have previously. (Other factors, such as the appalling first home owner’s grant, discounted capital gains tax and negative gearing have assisted in residential housings rise).
Source: Steve Keen’s Debtwatch
Moreover, while the price of gold has increased by 11.99% annually since 2001, that rise has been clearly outstripped by the increase in residential property in all capital cities other than Sydney (which rose substantially prior). For example, since 2002, the ABS calculates that Melbourne prices have risen by 15% annually, Brisbane by 19%, Adelaide 16%, Perth 22% and Hobart by 23% per year.
It seems somewhat ironic that Robertson would (not unjustifiably) point to a looming gold bubble while at the same time, criticising others for suggesting that Australia is trapped in a housing bubble.
Robertson’s employer, Macquarie Bank, appears to be taking a similarly bullish view on property. Only recently, Macquarie purchased a 53% stake in Rismark, the company run by Crikey’s and Business Spectator’s Chris Joye. Rismark sells an innovative shared-equity mortgage product. Shared-equity products require a rising housing market (as consistently advocated by Robertson) to be able to sell what is essentially a wholesale investment in residential property to investors.
Aren’t you refusing cause and effect here? Young people and others are taking out huge loans in order to get into the market because prices are going up, due to causes such as population pressure, negative gearing, capital gains tax concessions and the like. The prices are not going up *because* people are borrowing more money – they are borrowing more money because prices are going up.
Robert makes some good points, however, I think there’s a great deal more to the problem…and it’s a massive problem in terms of power broking realisations and the enslavement by debt. Real estate is one of the most significant tools in currying favour and cash from developers, in disciplining people through debt and anxiety, in hiding government corruption, in exercising social control and other aspects of anthroplogy and in aligning similar cultures for political purposes ….eg in doing nothing to prevent aliens “taking over” areas as is the often description, for example Chatswood or Granville or Bellevue Hill (just as commonly noted areas) whether the people are later to become citizens or not,then controlling an “ethnic” organism through leadership of a village has been cultural and iconised, an easier vote .
I accept this is changing as the expats wise-up to their rights. Real estate was once auctioned or later sold at very reasonable prices through the crown land schemes. This has now become a commercialised scheme, albeit with proper facilities coming with the land and certainty in the conveyacing. The original scheme became a vehicle for abuse though numerous expatriot purchases done through contacts here and Australians lost a great “kick off” facility. Stories are told of how real estate and wages have kept proprtion. In general terms this is nonsense.
One example, I was earning $450/week when I paid $25,750 for a house in West Pymble…so say 57 complete salary payments. In the same job my wages would now be $1250 and that house, without a single added government or any other benefit and in far worse condition was recently sold for $950,000…a total of 760 repayments. That’s the general picture in the government and real agency hogwash on “nothing’s changed” . When doing a lot of work with agents I sometimes raised with them that the “picture of the old man who waited fro the price of real estate to comedown” would one day become an embarassment. When the market crashed he was removed and generally has never re-appeared.
It was said a couple of years ago that only one person predicted the financial crash and real estate morosemess in recent years…I found that puzzling as I predicted it to the very year in my essay on the matter when studying town/land planning in 1992.
I can tell many stories about real property and about the politics of real property and debt. I think a small burst which might encourage someone to look further, or get incensed and try to shoot me down is worthy of the presentation of some facts maybe without going into justification .Property doesn’t shoot up overnight owing to sudden public demand, it’s a product in everyday terms of real estate agencies seeking more commisisons by setting a new level or by using the quite inappropriate tool of “auction results” as being “best indicator”references .
Auctions, unless consistently bringing an elevated price without any differences between properties’ facilities, is not a credible gauge of general market value.In the pure form auctions are a tool to determing the public response to properties which are NOT representative of the norm. real estate price increases are largely responsive to the price of money and the level of buoyancy of the economy, to wit, unfettered deposit amounts available through savings. Here lies the poorest quality of government assistance other than in the isulation scams, where agents used the smell of government assistance to drive up property prices…encourage people to go deeper into debt.
The best thing government could do, other than amore complex scheme I devised, might be simply to (return to) allow 100% tax deductions on first home pownership with a limit of $350,000 and encourage development of areas where all houses fitted that profile…but no scheme can really evade corrupting of its good intentions unless serious restrictions on resale within say 12 years are exercised.
All that aside, property has stamp duty costs of a high order, maintenance and depresciation costs, rates and other imposts, insurance costs of various types, best income figures of around 4.75% national average on rental property and plenty of capital cost surprises with tenants as well as agency fees.
Gold has none of thse when left with the holder of the gold. The holder of the gold is the same organism as determines the costs or money and the politics of almost all countries by being the owner of nearly all of he world’s currency..the so called de Rothschild”empire…the descendants of the banker criminal who has been responsible for most of the world’s misery since the Frech revolution, who charged 36 to 33 % interest on money to governments knowing the taxpayer would eventually meet the debts. The organism organised the assassination of Lincoln and in league with other angered groups orgnised, in my view, Jack Kennedy’s assassination. Joe made promises to the mafia which Jack didn’t keep, Jack upset Israel and thus the Masonic Lodge which is incestuous with israel and America especoiially noted in the “justice” architecture of Washington and Israel , He upset the de Rothschild orrganism by creating debt free money, as was Lincoln’s death warrant. The “it was Russia” accusation or “Cuba” was just as correct as had one said it was Britain or Australia because the same reptile is behind all those governments as well as Europe/ Maryin was killed for the same reason of discipline and warning…one notices how LBJ raced to get rid of Kennedy’s dictums on currency and on Israel….but also to kill off any pillow talk possibilities. Her zionist psychiatrist well deserves the scrutiny he has received.
The newly formed Masonic Lodge was infiltrated by the Criminal Banker Mayer Amschel Bayer around 1770, after stealing 300 million from the king of Hess, Bauer under the guise of “de Rothschild”…later “Baron” de Rothschild.
In his twisted illuminati mind he called Europe’s 12 top bankers to a conference (significant as the old jewish organism that Jeus used, messiah plus 12 ….whence grew in 740 ad the Khazar zionists but “faux” jews which created Israel with the assistance of the Reich to who they turned over many thousands of jewish escapees…as recorded by jewish people…see for example “jewsagainstzionism.com) and commenced the planning of the new world government by bankers, a concept with has been furthered almost to completion.
Among his and the organisms money making plots have been the French revolution, the Russian revolution WW1, WW11 and the “global melt down” hse have been stages in the grasping of all the world’s wealth and in political reorganisation. The speed with which political and financial variations rip around the globe is s it was in WW11 where the lodge, supposed to be a victim of Hiltle, was able to whiz messages into and out of Germany
Those involved are the central banks (all but 5 belong to the organism, the rest are called “the axis of evil”) and the prime base is Zionist israel with America as the subservient partner.There has just a few days ago been an expose of Juliet Gillard’s inappropriate collusion with israel and Aiustralian zionists…I have no dout in the planning of the Rudd Coup…as has been indecently, Rudd himself and Turnbull, also forelock tugging with the election coming. Rudd was not then up to speed with the plot to depose him in which zionists played their part. Gillard’s boyfriend is alreast exposed for lobbying through Gillard for the major zionist real estate agency in Australia to get permission for two high-rise buildings who’s compliance is doubted. He is no longer a blow jobber fpor some haoirdresser as ahas been lied about but an agent for the Israeli estae Agent. It may well have been my exposures which intiated the SMH and AGR “exposes”….and the photos I lifted from the Australian Jewish News have been taken off its site….too late but significantly “gone”!!
Gold is multipurpose and in times of war where real property might fall to$ zero gold will not do so.The price of gold as is the price of money and of debt. Gold has no maintenance costs in the way typically bought. Gold’s price is controlled by de Rothschilds who own most of the world’s . Gold has no depreciation costs nor does it require anything but capital costs. Gold is readily convertible and understood in most cultures. Gold does not…as do diamonds….deteriorate. Gold can be readily traded at distance and requires no “inspection” or “open house” or auctions.The national average return from domestic rental is around 4.75% and its return is relative to its management….not so with gold. Property can have startling increases and reversals but can also be burned down or damaged in war or other strife….that is unlikely with gold. The insurance of gold unless held personally is not an issue. I could go on and on but as an investment gold has many superior qualities to real property and notoriously the real costs of owning real property are ignored in the assessments of it’s value as an investment.
I’ll leave it there…hopefully some investigations of issues raised will follow, rather than anyone simply take me at face value.