Carlos Slim, who became the richest man in the world by monopolising Mexico's phone market, has savaged the Labour government's proposal to spend $43 billion on a national broadband network (NBN). He isn't knocking the need for a high speed national network, but questions the cost, and the viability of adopting today's technology at a time when technology is advancing so fast. He believes any network should, for instance, include a good WiFi element.
Another issue that is being talked about but not clarified is whether the quoted price for the NBN is a total price, including remediation work to streets and property after the installers have done their work.
Thursday, September 30, 2010
Migration dropping, babies booming.
Bureau of Statistics figures show annual population growth has slowed from 2.2% to 1.8%. Over the year to March, 241,400 people migrated to Australia, compared to 320,300 in the same period last year. However in the same period a record 303,500 babies were born in Australia, up 3.1% over last year. and the number of deaths falling. Overall the annual growth in population remains well above the long term average, concentrated in WA (2.3%) and Queensland (2.2%) with NSW expanding by just 1.6%.
An economist at CommSec, Savanth Sebastian, commented on how this will affect Australia. "More people means greater demand for houses, roads, schools, hospitals, and a raft of retail goods." More challenges for Kristina!
An economist at CommSec, Savanth Sebastian, commented on how this will affect Australia. "More people means greater demand for houses, roads, schools, hospitals, and a raft of retail goods." More challenges for Kristina!
Tuesday, September 28, 2010
Opposition to the Barangaroo Lend Lease proposal
Reading the newsletter of the Barangaroo Action Group, I found a number of excellent arguments against the proposal, including this one:
1 - A single developer undertaking the whole development results in lack of competition and places in the hands of one corporate entity the timeframes for the construction, which will be dictated by that one entity’s commercial interests. As such, residents and city workers will be living in a construction site for up to 15 to 20 years, while an unacceptable high density development spreads over the whole site, much as Lend Lease’s Jacksons Landing project has done.
The same argument could be used against the proposed commercial upgrade of the M2. If Transurban is allowed to manage this $550M project, what guarantees will the NSW government have, and what penalties will be available, to enforce timescales and standards?
Regarding the proposed huge hotel in Barangaroo, Lend Lease promise that it will remain a hotel, but such promises are seldom kept - like the divided carriageway of the M2 over Clilworth Reserve, which Transurban now intends to fill in as part of the widening project. A number of news articles have implied that Lend Lease anticipates the hotel failing when they will seek approval to convert the building into prime appartments, making another obscene profit.
1 - A single developer undertaking the whole development results in lack of competition and places in the hands of one corporate entity the timeframes for the construction, which will be dictated by that one entity’s commercial interests. As such, residents and city workers will be living in a construction site for up to 15 to 20 years, while an unacceptable high density development spreads over the whole site, much as Lend Lease’s Jacksons Landing project has done.
The same argument could be used against the proposed commercial upgrade of the M2. If Transurban is allowed to manage this $550M project, what guarantees will the NSW government have, and what penalties will be available, to enforce timescales and standards?
Regarding the proposed huge hotel in Barangaroo, Lend Lease promise that it will remain a hotel, but such promises are seldom kept - like the divided carriageway of the M2 over Clilworth Reserve, which Transurban now intends to fill in as part of the widening project. A number of news articles have implied that Lend Lease anticipates the hotel failing when they will seek approval to convert the building into prime appartments, making another obscene profit.
Monday, September 27, 2010
Selling the family silver
This interesting letter was in the Sun Herald:
Dear Sir
Another community-owned icon is about to bite the dust. Queensland Rail National is to be sold-off; Commonwealth Bank, Qantas, State Bank, GIO, NRMA Insurance - we once owned them all & they were substantial publicly-owned assets performing a vital honest broker role for our community.
No doubt our electricity & water infrastructure, schools & hospitals will one by one come under attack from the same lobbyists & corporate opportunists who make mega bucks out of spruiking such deals.
These community assets have been built up over generations of Australians who have fought wars to protect our way of life & they'd be rolling in their graves to see what's become of such icons.
Selling out Australia's future for a few silver coins is not in Australia's best interests.
Yours sincerely
Richard Talbot
Dear Sir
Another community-owned icon is about to bite the dust. Queensland Rail National is to be sold-off; Commonwealth Bank, Qantas, State Bank, GIO, NRMA Insurance - we once owned them all & they were substantial publicly-owned assets performing a vital honest broker role for our community.
No doubt our electricity & water infrastructure, schools & hospitals will one by one come under attack from the same lobbyists & corporate opportunists who make mega bucks out of spruiking such deals.
These community assets have been built up over generations of Australians who have fought wars to protect our way of life & they'd be rolling in their graves to see what's become of such icons.
Selling out Australia's future for a few silver coins is not in Australia's best interests.
Yours sincerely
Richard Talbot
Wednesday, September 22, 2010
House Price Statistics
An interesting article in the Northern District Times explains the differences between figures used by people predicting a house price crash, and those expecting stability and even continuing growth.
Jeremy Grantham, a US investment banker, says Australian property is a time bomb, alleging the house price ratio compared to disposable income is 7.5 times, around double what it should be.
Rismark disputes this, blaming foreign hedge funds for shorting Australian bank shares in anticipation of a housing bubble bursting. Rismark calculates the house price ratio as 4.6, by using all properties in Australia, not just the cities. Of course, this really reflects the fact that most people don't want to live in rural areas despite cheap housing.
The deputy governor of the Reserve Bank, Ric Battellino, supported Rismark's view, agreeing that city house prices are "quite elevated" but if you look across the whole country prices are not that different to thos in other countries. He says that house prices in Australian cities are not high relative to the incomes in the cities.
Jeremy Grantham, a US investment banker, says Australian property is a time bomb, alleging the house price ratio compared to disposable income is 7.5 times, around double what it should be.
Rismark disputes this, blaming foreign hedge funds for shorting Australian bank shares in anticipation of a housing bubble bursting. Rismark calculates the house price ratio as 4.6, by using all properties in Australia, not just the cities. Of course, this really reflects the fact that most people don't want to live in rural areas despite cheap housing.
The deputy governor of the Reserve Bank, Ric Battellino, supported Rismark's view, agreeing that city house prices are "quite elevated" but if you look across the whole country prices are not that different to thos in other countries. He says that house prices in Australian cities are not high relative to the incomes in the cities.
Monday, September 13, 2010
Owner-builder Training Changes
People in NSW wanting to build or renovate their own house will from next month have to undertake a course taking at least a week and costing $800 or more. The course includes a 700 page manual. At present about 1000 permits are awarded each month, after an online training course taking four hours. The number of people taking the new course is probably going to be significantly less!
Sunday, September 12, 2010
M2 Widening Benefits Challenged
John Goldberg, a former principal scientist at the CSIRO and now at University of Sydney has questioned the validity of statistics used to justify the $550M project to widen the M2 through Beecroft and Cheltenham.
Mr Goldberg told the Sydney Morning Herald that he had studied all the traffic densities and the corresponding speeds and concludes that it would be a break-even proposition to get more than 10 km/h increase in average speeds. Transurban have claimed a 40 km/h increase, an estimate that Mr Goldberg says is "wildly out".
He also challenges their estimates for cost-benefit ratios for travel times, accidents, and vehicle operating costs. The company's analysis concluded "the project is economically worthwhile with benefits for the community being estimated to be 3.4 times greater than the costs." Mr Goldberg has reached very different conclusions. He believes the benefits will be only 0.27 times the cost, far below the threshold required for major road projects under the state's environmental laws.
Of course the NSW government and RTA are probably not unduly perturbed about the cost benefit of the project, because Transurban will be funding the work themselves and recovering the cost by increased tolls on road users, a rather neat way of new indirect taxation.
Meanwhile the residents of Beecroft and Cheltenham stand to have two years of massive construction work, and lose much of the delights of the Chilworth Reserve when the present quite tasteful two flyovers are replaced with a ten lane monster highway.
Mr Goldberg told the Sydney Morning Herald that he had studied all the traffic densities and the corresponding speeds and concludes that it would be a break-even proposition to get more than 10 km/h increase in average speeds. Transurban have claimed a 40 km/h increase, an estimate that Mr Goldberg says is "wildly out".
He also challenges their estimates for cost-benefit ratios for travel times, accidents, and vehicle operating costs. The company's analysis concluded "the project is economically worthwhile with benefits for the community being estimated to be 3.4 times greater than the costs." Mr Goldberg has reached very different conclusions. He believes the benefits will be only 0.27 times the cost, far below the threshold required for major road projects under the state's environmental laws.
Of course the NSW government and RTA are probably not unduly perturbed about the cost benefit of the project, because Transurban will be funding the work themselves and recovering the cost by increased tolls on road users, a rather neat way of new indirect taxation.
Meanwhile the residents of Beecroft and Cheltenham stand to have two years of massive construction work, and lose much of the delights of the Chilworth Reserve when the present quite tasteful two flyovers are replaced with a ten lane monster highway.
Wednesday, September 8, 2010
Housing Sales Up
According to Alison Bell of the Daily Telegraph, home and mortgage sales jumped 11% in August as homebuyer confidence strenghened and mortgage delinquencies stabilised.
As expected, the Reserve Bank kept interest rates steady this month. However banks are incurring extra costs borrowing money from abroad so individual bank mortgage rates might rise anyway.
As expected, the Reserve Bank kept interest rates steady this month. However banks are incurring extra costs borrowing money from abroad so individual bank mortgage rates might rise anyway.
Monday, August 16, 2010
Levels of Household Debt
There's an interesting article by Jonathan Chancellor about how the level of household debt in Australia has risen from 50% of household disposable income in 1980 to 150% now. One wonders to what extent this is just a shift in our outlook on life, with people now comfortable to borrow freely.
A good sign is that the number of repossession actions lodged in the NSW Supreme Court is well down on the last few years.
Deutsche Bank feels that concerns about Australian house prices are ebbing, suggesting a steady moderation in price pressures.
A good sign is that the number of repossession actions lodged in the NSW Supreme Court is well down on the last few years.
Deutsche Bank feels that concerns about Australian house prices are ebbing, suggesting a steady moderation in price pressures.
Monday, August 9, 2010
"Prices up, vendors selling at a loss"
That eye-catching headline is from today's Sydney Morning Herald. The article by Jonathan Chancellor gives examples of recent sales where properties have gone for well below the earlier purchase price. One such property sold for $1.25M after being bought in 2007 for $1,635,500, a 23% price fall over the last three years. The successful selling agent explains that this was because the original purchaser overpaid when he bought it. I wonder how many recent first-home-buyers are wondering about their futures.
From the same edition of the SMH, this article by Simon Johanson discusses the nature of growing Sydney house prices under the headline "Property apocalyptics predict bubble trouble", and talks around the prospect for a collapse. Simon makes the point I mentioned in my last blog, that "no one wants a sharp plunge in house prices". Any politician putting forward plans deliberately to drive prices down could find very few supporters. But then, nobody wanted the collapse that hit America two years ago.
From the same edition of the SMH, this article by Simon Johanson discusses the nature of growing Sydney house prices under the headline "Property apocalyptics predict bubble trouble", and talks around the prospect for a collapse. Simon makes the point I mentioned in my last blog, that "no one wants a sharp plunge in house prices". Any politician putting forward plans deliberately to drive prices down could find very few supporters. But then, nobody wanted the collapse that hit America two years ago.
Friday, August 6, 2010
Home Affordability
In SMH's daily "Decision 2010" columns there is an article on home affordability.
It makes the point how Kevin Rudd's doubling of the first home owner grant boosted house prices, with the average loan during Rudd's truncated time in office rising from $230,000 to $290,000. The problem with this, of course, is that now the grant boost has been removed, those house prices must slip back, leaving new home buyers stressed by increasing interest rates and facing negative equity.
No matter, Tanya Plibersek says, the grant kept builders in work. But if that was the only objective, the grant should have been restricted to new construction, and not used just to boost the prices of existing homes.
The report makes the point that "about 70% of Australia's 9 million or so dwellings are owner occupied, so increased housing affordability is not really the priority of the majority". Indeed most home owners would be very upset by any plan which proposed very swiftly to reduce house prices, if it involved them getting less money when they sell their homes. 70% of voters would say "by all means cut sales and land taxes, but don't threaten the sale value of my asset!"
It makes the point how Kevin Rudd's doubling of the first home owner grant boosted house prices, with the average loan during Rudd's truncated time in office rising from $230,000 to $290,000. The problem with this, of course, is that now the grant boost has been removed, those house prices must slip back, leaving new home buyers stressed by increasing interest rates and facing negative equity.
No matter, Tanya Plibersek says, the grant kept builders in work. But if that was the only objective, the grant should have been restricted to new construction, and not used just to boost the prices of existing homes.
The report makes the point that "about 70% of Australia's 9 million or so dwellings are owner occupied, so increased housing affordability is not really the priority of the majority". Indeed most home owners would be very upset by any plan which proposed very swiftly to reduce house prices, if it involved them getting less money when they sell their homes. 70% of voters would say "by all means cut sales and land taxes, but don't threaten the sale value of my asset!"
RTA backs down on Motorway Extension
According to the SMH today, the Roads and Traffic Authority "has been forced to back away from a plan to build a four-lane extension of the M5 motorway through Sydney's inner west, after state and federal ministers indicated they would not support the project".
The NSW state Roads Minister David Borger said the government had heeded the community's call: "I queried the benefits of proposals that appeared to carve through suburbs for the sake of route convenience instead of securing new more direct routes to hubs of economic activity like the airport and the port."
That observation puts one in mind of the ten lane carriageway the RTA is planning to drive through Chilworth Reserve in Beecroft, and the proposed tunnel under Pennant Hills Road joining the eastern end of the M7 to the southern end of the F3, both for the sake of route convenience. What Sydney clearly needs is a direct route road built to conduct traffic from the NW corner of the M7 directly onto the F3 further north, taking all the interstate traffic completely away from Sydney. It seems inevitable that such a road will be built eventually, so why spend all this money on short term paliatives, the building of which involve huge inconvenience and disruption to the local residents?
One piece of good news is that the M5 expansion had been shortlisted as a "nationally significant priority project" yet has been varied by public pressure. The M2 widening project was also listed, by Kristina Keneally in her previous position in the State government, but clearly politicians will respond if the people protest enough.
Back in May Kristina "personally deleted" the proposed extension of the F6 motorway from the government's transport plan, because the state doesn't have the money." (Sub-text - the State government seems to have fluffed several submissions to Federal government for funding, so money we should have received went to the other states.)
The reason the M2 widening project is still going ahead is because State is granting Transurban a licence to do the work at their cost, in return for being allowed to charge increased tolls for an extended period. Let's hope Transurban doesn't run out of money half way through the construction phase!
The NSW state Roads Minister David Borger said the government had heeded the community's call: "I queried the benefits of proposals that appeared to carve through suburbs for the sake of route convenience instead of securing new more direct routes to hubs of economic activity like the airport and the port."
That observation puts one in mind of the ten lane carriageway the RTA is planning to drive through Chilworth Reserve in Beecroft, and the proposed tunnel under Pennant Hills Road joining the eastern end of the M7 to the southern end of the F3, both for the sake of route convenience. What Sydney clearly needs is a direct route road built to conduct traffic from the NW corner of the M7 directly onto the F3 further north, taking all the interstate traffic completely away from Sydney. It seems inevitable that such a road will be built eventually, so why spend all this money on short term paliatives, the building of which involve huge inconvenience and disruption to the local residents?
One piece of good news is that the M5 expansion had been shortlisted as a "nationally significant priority project" yet has been varied by public pressure. The M2 widening project was also listed, by Kristina Keneally in her previous position in the State government, but clearly politicians will respond if the people protest enough.
Back in May Kristina "personally deleted" the proposed extension of the F6 motorway from the government's transport plan, because the state doesn't have the money." (Sub-text - the State government seems to have fluffed several submissions to Federal government for funding, so money we should have received went to the other states.)
The reason the M2 widening project is still going ahead is because State is granting Transurban a licence to do the work at their cost, in return for being allowed to charge increased tolls for an extended period. Let's hope Transurban doesn't run out of money half way through the construction phase!
Monday, July 26, 2010
Trends in Sydney House Sales
There is a good article in SMH Business Day today, comparing auction success rates around Australia. Sydney and Melbourne account for 80% of the overall capital city market, 26,000 for Melbourne and 20,500 in Sydney during 2009. In Melbourne auctions account for 30% of sales, in Sydney 20%. It must be remembered that Melbourne has a higher proportion of units than Sydney, and has more houses than any other state capital.
"The most obvious recent trend has been the weakening of weekend auction success rates since late April in both cities. Detecting price movement trends has been harder."
In February and April 75% of properties sold under the hammer, July's auction clearance rate was 61%.
"The most obvious recent trend has been the weakening of weekend auction success rates since late April in both cities. Detecting price movement trends has been harder."
In February and April 75% of properties sold under the hammer, July's auction clearance rate was 61%.
Wednesday, July 21, 2010
Housing Strategy Submissions - analysis
The following post is a precis and discussion on a post copied from another blog:
Council's findings on the submissions are in
https://businesspapers.hornsby.councilsonline.com.au/Open/2010/PL_07072010_AGN.PDF
It includes: "Submissions raised objections to the Strategy (or aspects of the Strategy), provided constructive feedback on how it could be improved, indicated support for the Strategy, and suggested other precincts for inclusion." This statement might seem to imply that there was a fairly even distribution between these four categories of respondents. However another council document says only 2% of submissions were in favour of the proposal.
Individual precinct analyses are at:
http://www.hornsby.nsw.gov.au/uploads/documents/Housing_Strategy_Attachment_2.2.pdf
This reports 443 form letters and 168 individual letters were received regarding Beecroft. Of the 168 individual letters relating to Beecroft, 13% (ie 20 letters) were in favour, 4% suggested alterations (the report doesn't say whether they were for or against) and 83% (140 letters) were against. Of the 443 form letters received only 3 (less than 1%) supported the proposal and 440 were against. So of the 611 submissions, at least 580 (95%) were against the proposal.
So the statement in the main report should really read:
"The overwhelming majority of submissions opposed the Strategy. A small number provided feedback on how it could be improved, and a trivial number supported the Strategy."
This puts a slightly different slant on Beecroft resident's views on the council's proposals. Despite that, Beecroft is still to be rezoned for 5 storey mixed development.
Council's findings on the submissions are in
https://businesspapers.hornsby.councilsonline.com.au/Open/2010/PL_07072010_AGN.PDF
It includes: "Submissions raised objections to the Strategy (or aspects of the Strategy), provided constructive feedback on how it could be improved, indicated support for the Strategy, and suggested other precincts for inclusion." This statement might seem to imply that there was a fairly even distribution between these four categories of respondents. However another council document says only 2% of submissions were in favour of the proposal.
Individual precinct analyses are at:
http://www.hornsby.nsw.gov.au/uploads/documents/Housing_Strategy_Attachment_2.2.pdf
This reports 443 form letters and 168 individual letters were received regarding Beecroft. Of the 168 individual letters relating to Beecroft, 13% (ie 20 letters) were in favour, 4% suggested alterations (the report doesn't say whether they were for or against) and 83% (140 letters) were against. Of the 443 form letters received only 3 (less than 1%) supported the proposal and 440 were against. So of the 611 submissions, at least 580 (95%) were against the proposal.
So the statement in the main report should really read:
"The overwhelming majority of submissions opposed the Strategy. A small number provided feedback on how it could be improved, and a trivial number supported the Strategy."
This puts a slightly different slant on Beecroft resident's views on the council's proposals. Despite that, Beecroft is still to be rezoned for 5 storey mixed development.
Friday, July 16, 2010
Stamp Duty cuts for Pensioners
Under the latest NSW state budget people over 65 will not pay stamp duty when selling an existing property and buying a newly constructed home costing up to $600,000.
The objective was to allow retirees to downsize while staying in the area they now live in. However for elderly residents in Beecroft and Cheltenham, this will have little effect as there is little prospect of any new constuction homes coming available for less than $600,000. Adding the development contribution cap of $20,000 imposed by NSW state government, there seems little prospect of any developers going out of their way to build to suit this market.
The objective was to allow retirees to downsize while staying in the area they now live in. However for elderly residents in Beecroft and Cheltenham, this will have little effect as there is little prospect of any new constuction homes coming available for less than $600,000. Adding the development contribution cap of $20,000 imposed by NSW state government, there seems little prospect of any developers going out of their way to build to suit this market.
Rent Freeze ends
The NSW State Government has refused to bow to pressure to extend its promise not to gouge from last year's $30 pension increase when calculating public housing rentals. Last September under pressure from the Federal Government, the states had agreed not to include the increase in single pensions in rent calculations.
Charmaine Crowe, policy co-ordinator for the Combined Pensioners and Superannuants Association, argues: "A single pensioner in public housing pays at least $3770 in rent per annum. That's comparable to what a pensioner owning a house pays in land rates and home maintenance. Yet the pensioner in public housing has a pension cut of 25%, while the home-owning pensioner keeps the entire amount."
Charmaine Crowe, policy co-ordinator for the Combined Pensioners and Superannuants Association, argues: "A single pensioner in public housing pays at least $3770 in rent per annum. That's comparable to what a pensioner owning a house pays in land rates and home maintenance. Yet the pensioner in public housing has a pension cut of 25%, while the home-owning pensioner keeps the entire amount."
Wednesday, July 14, 2010
M2 Widening Project - Noise barrier height
I found a really well prepared presentation on the noise problems associated with the proposed widening of the M2. A key element of the presentation covers the noise barriers, and in particular the height of them. The number of trucks using the M2 doubled in 2006 when the M7 opened. The report suggests some 47,000 cars and 7,300 trucks are using the M2 now, and the number of trucks is forecast to rise by 25% over the next ten years.
The noise barrier height is perhaps the critical factor in shielding the neighbourhood from the noise of these trucks, and the existing commonly used 2.4m high barriers are just inadequate. With truck exhausts typically 4.5m high, or more, those barriers achieve very little. A 4.8m barrier would seem to be essential.
Where the motorway is below the level of adjacent houses, such as where it crosses Chilworth Reserve, even higher barriers might be needed.
Of particular concern to residents must be the likelihood of the barriers being removed totally during periods of the two year construction program.
The noise barrier height is perhaps the critical factor in shielding the neighbourhood from the noise of these trucks, and the existing commonly used 2.4m high barriers are just inadequate. With truck exhausts typically 4.5m high, or more, those barriers achieve very little. A 4.8m barrier would seem to be essential.
Where the motorway is below the level of adjacent houses, such as where it crosses Chilworth Reserve, even higher barriers might be needed.
Of particular concern to residents must be the likelihood of the barriers being removed totally during periods of the two year construction program.
Monday, July 12, 2010
Clearance rates down this month
RP Data reports the national auction clearance rate as 56%. According to their research director "the most surprising factor is that volumes remain so bouyant despite clearance rates trending down for 11 weeks now."
Thursday, July 8, 2010
What if nobody comes?
The following thought-provoking quotation is taken off the internet:
"The estimated population growth target for Sydney (1.1 million by 2031) is completely unrealistic and there is the danger that planning is done for assumed developments which can never happen. The result will be to upset the lives of many residents who are forced to move out of their homes to make room for high-rises which will become future slums. We can even have the situation that houses are demolished by developers but then the land is left vacant because finance cannot be found in the next financial melt-down."
The same concern applies to Hornsby Shire's Housing Strategy - if they rezone Beecroft and other precincts to 5-storey to meet government targets, and the Federal Government then changes the population prediction, will those rezonings be cancelled?
The same website make this proposition:
"The Federal government has appointed a Population Minister, who will research into the population carrying capacity of Australia. This process including public consultation will take
one year. Until this report is out, all activities in relation to Housing Policies should be suspended."
"The estimated population growth target for Sydney (1.1 million by 2031) is completely unrealistic and there is the danger that planning is done for assumed developments which can never happen. The result will be to upset the lives of many residents who are forced to move out of their homes to make room for high-rises which will become future slums. We can even have the situation that houses are demolished by developers but then the land is left vacant because finance cannot be found in the next financial melt-down."
The same concern applies to Hornsby Shire's Housing Strategy - if they rezone Beecroft and other precincts to 5-storey to meet government targets, and the Federal Government then changes the population prediction, will those rezonings be cancelled?
The same website make this proposition:
"The Federal government has appointed a Population Minister, who will research into the population carrying capacity of Australia. This process including public consultation will take
one year. Until this report is out, all activities in relation to Housing Policies should be suspended."
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