Market Insights by Kevin Young

Wreaking Havoc On The Economy

Property Club Property Market Insights

I have just come from a group meeting of small business with Michael McCormack MP and Kate Carnell Australian Small Business Ombudsman. My thanks to Andrew Laming MP for organising this most constructive meeting.

The mood was definitely anti-banks first and anti-government second.

My thoughts are that both emotions are ill directed. Their anger should instead in my opinion, be directed against APRA Chairman Wayne Byres who sits on, I believe, $1 million a year income and is ignorant of the property market that he is meddling in.

He is unknowingly – or deliberately? – wreaking havoc on the economy, jobs and the growing two million army of underemployed in Australia.

But Wayne Byres, APRA Chairman, is great for my pocket and yours!

In my opinion, he is incompetent in the property industry. He is applying all sorts of finance restrictions on your pocket that will only decrease supply which is increasing prices.

Aren’t we happy we have lots of property that Wayne is pushing up in price? You all know the banana’s story. Should I send Wayne a bunch of bananas and the first rule of economics?

Let’s prove he is incompetent.

In property anyway…

He thinks he is going to reduce property prices in Sydney because he believes the sensational media headlines that it is out of control. It is not and let’s prove it by taking Wayne for a little walk through history.

Our first chart below is of the last five years to January 2016. As you can see Wayne is alarmed that Sydney has leapt 41.7%. You and I can see that this is not the norm for every other part of Australia. This means there is no need for national action at all.

The next chart has the property growth for each capital city for the ten years to January 2006. There we can see that Sydney rose 138%. In that ten years, the wise APRA chairman let the market sort out the property boom in Sydney from 2001 to 2004. That period saw greater growth than the current one that is so alarming Mr Byres.

So next let’s look at the last ten years to January 2016. Do we have Sydney rising more in the last ten years than the previous? Do we have a need for blundering Byres interfering in the market? Clearly not! In fact, the growth in the last ten years in Sydney is nearly half of the previous ten years. Currently 78% increase versus 138% then.

Wreaking Havoc

Incidentally, I have to thank Tim Lawless from Core Logic for these historical figures. Rushed out for our members last night. His comment was “based on this data, the most recent decade of capital city home value growth has been half that of the previous decade”. So Mr Byres, why are you bungling in the market that you apparently know nothing about.

So the mood of the electorate is anti-government and anti-banks, but shouldn’t it really be anti-Byres? I believe he acted without discussion papers to the community or his supposed masters, Members of Parliament.

The future…

Club members are jumping in and buying now aware that the growing shortage will continue to grow prices. My sympathy is with the average Mum and Dad who don’t have the benefit of our wide network of Club focused Brokers. We can find good funds where Joe Public is getting refused by banks, blaming APRA.

What can we do?

Click below to register your email if you would like us to take a submission to the above McCormack and Carnell? I believe the banks would want the government to stop Byres blundering through the economy.

Ps. Our last petition on the banking inquiry was successful with 3500 requests given to Joe Hockey when he became Treasurer. Let’s see what Scott Morrison can do.

Kevin Young
Property Club Founder