Australian (ASX) Stock Market Forum

A city doesn't need a specific land type to be viable when you consider that practically everything a city needs is brought in from outside the urban environment anyway.

Historically the Australian state capitals were set up where water was available. But if you look at it today, well most water in Adelaide doesn't come from the Torrens and even Hobart gets 80% of its' water from sources other than Mt Wellington and the Hobart Rivulet which flows from it. Much the same everywhere.

Food - most of it isn't grow in cities. It is grown elsewhere and brought in by road and rail.

Water - the existing cities have already grown too large for their local water sources, now bringing it in from more distant areas and in more recent times desalination which works anywhere you've got access to sea water.

Power - Apart from Darwin (virtually the entire supply), Adelaide (about half the supply) and to a lesser extent Perth, not much electricity is produced within city environments these days apart from rooftop solar (which works anywhere the sun shines). For Sydney and Melbourne, most of it already comes from 150 - 200km or more away.

Gas - piped in from gas fields. It's pure coincidence that Melbourne and Darwin aren't too far from gas fields, they weren't know about when the cities were established and in any event, it's easy to pipe gas over long distances. Sydney's gas comes from Vic and SA, for example, all gas in Tas comes from Vic and until a few years ago all gas in Darwin came from the other end of the NT.

Transport fuel - easily shipped or piped in. Practically all the petrol, diesel etc we use is from crude oil produced nowhere near the point of use. In Sydney, the whole lot is shipped in already refined and it's the same in NT, SA and Tas. There are refineries in and near Perth, Melbourne and Brisbane but they're largely processing oil from distant sources either Australian or foreign.

Manufactured goods - a factory can be set up anywhere and in any event, most of what we buy these days is imported. There's no fundamental reason why we had to make cars in Adelaide for example, the factories could have been built somewhere else. And if you do build a big factory in a small town, well then it becomes a bigger town pretty quickly - plenty of places have seen that happen over the years.

Looking at a map, I don't see that Melbourne is the only place in Victoria, or Sydney is the only place in NSW, where a city of 2 million people could exist. And then there's existing cities other than Sydney, Melbourne, Brisbane and Perth, many of which would arguably benefit from greater scale since they're nowhere near the point of diminishing returns yet.

So far as housing is concerned, a great deal of our problems are because we're trying to cram everyone into just two cities.

As an example of a possible approach, if the company tax rate were lowered by even just 1% for companies with an Australian head office located outside the big cities then that alone would do wonders for regional development and fixing the infrastructure problems in the major cities.:2twocents
 
As an example of a possible approach, if the company tax rate were lowered by even just 1% for companies with an Australian head office located outside the big cities then that alone would do wonders for regional development and fixing the infrastructure problems in the major cities.:2twocents

My suggestion was/is that their should be payroll tax concessions/elimination for companies employing >x number of employees at the same site outside capital cities. I remember years ago when I last "worked" in Sydney in IB we had so many admin staff, who performed back office functions, that trundled in 1-2 hours by train to work in the CBD when they could just have easily done it in Albury/Port Macquarie/Newcastle/Bowral etc etc. There was absolutely no reason for them to be in CBD.
 
What industry are you going to set up in Bendigo to make it a viable economic center ? In my view the trade unions have made any serious economic expansions virtually impossible. You would need something big like a motor company or a pharmaceutical company to move to these locations. We have places like Newcastle and Canberra which represent small cities but their population is nothing compared to a city like Cologne.

Unless we can get some actual competitive advantage in something I can't see how the existence of small cities is a realistic prospect. You'd just be creating economic backwaters and as soon as some jobs did somehow move there property investors would smell blood driving prices through the roof which could potentially defeat the purpose of the whole thing and might even drive wages up causing the employer to leave.

The problem is with incentive and borrowing. A centralised city of 5 or 6 million should be able to manage just fine.
 
My suggestion was/is that their should be payroll tax concessions/elimination for companies employing >x number of employees at the same site outside capital cities. I remember years ago when I last "worked" in Sydney in IB we had so many admin staff, who performed back office functions, that trundled in 1-2 hours by train to work in the CBD when they could just have easily done it in Albury/Port Macquarie/Newcastle/Bowral etc etc. There was absolutely no reason for them to be in CBD.

Messing with the market in such ways is not a good idea. You could cause population drives into those cities without building housing. It will simply make the problem worse. You'd have junior administration staff sleeping in their cars, no one would want to move to this city and you'd end up paying 35% more to get people to go. An underclass develops in these cities and drugs become a problem.
 
What a difference a year can make in real estate eh? :banghead:

The Jollys, who polarised viewers more than any other team this season, pocketed $835,000 over reserve for their pad, which they renovated room by room over 10 weeks. They also earned themselves a $100,000 winner's cheque.

Last year, they were distraught after collecting just $10,000 for months of hard work on the Glasshouse series in Prahran

http://news.domain.com.au/domain/re...ost-1-million-at-auction-20150429-1mw74e.html
 
"The Block" is a crock of ****.

Jolly must have threatened legal action from the last series for the "reserves" to be set so unrealistically low.

Anyone in the building industry knows the contestants have zero input into these projects and are just celebrity labourers who do very little labouring.

I confess I watch it from time to time to reinforce how pathetic it is.
 
"The Block: A reality TV show without the reality"

http://news.domain.com.au/domain/re...ality-20150430-1mwlh8.html?rand=1430358429976

Like most of reality television, the screen-time version is a skewed version of real life. Strip back The Block branding and the outcome would have been entirely different.

Buyer's agent and valuer Greville Pabst​, of the WBP Property Group, who also appeared as a judge on the show, said the show's reserves "bear no relevance to reality".
 
Meanwhile over the ditch the Kiwis have hit the panic button.

http://www.globalpost.com/ said:
The Reserve Bank of New Zealand (RBNZ) said that property investors in Auckland, home to a quarter of New Zealand's population, would require a deposit of at least 30 percent when seeking a mortgage from Oct. 1.

And new rules for foreign buyers and CGT.

http://www.nzherald.co.nz/ said:
Two-year ownership requirement and curbs on foreign buyers announced as Govt moves to cool the Auckland market.

Amazing what a reserve bank can do when they are serious.
 
Meanwhile over the ditch the Kiwis have hit the panic button.



And new rules for foreign buyers and CGT.



Amazing what a reserve bank can do when they are serious.

I'm pretty sure that's APRA's remit in Australia. If there is a property crash guarantee you the RBA will be leaking against APRA saying they were too close to the banks and didn't institute tough macroprudential rules etc.
 
Meanwhile over the ditch the Kiwis have hit the panic button.

And new rules for foreign buyers and CGT.

Amazing what a reserve bank can do when they are serious.

That's a brave move and will stop their market in it's tracks.............
 
Ask and ye shall receive .. or is it that they are just copying NZ ?

Investor home loans tighten as regulator APRA clamps down

Lending for investment properties appears to have suddenly tightened, as the banking regulator's efforts to rein in the sector appear to be succeeding.

Mortgage brokers are reporting credit conditions in Australian housing lending market have become a lot tougher in the past two weeks according to CLSA's leading bank analyst Brian Johnson.

Mr Johnson said recent discussions with broking contacts pointed to banks cutting discounts on investment loans and demanding tougher scrutiny on borrowers' ability to repay their debts.

The crackdown comes only days after data was released showing mortgages had soared to a new record high of $31.3 billion in March.

http://www.abc.net.au/news/2015-05-18/investor-home-loans-tighten-as-regulator-clamps-down/6477134
 
Where is robots when we need him? Is that a Minsky graph?

Minsky proposed theories linking financial market fragility, in the normal life cycle of an economy, with speculative investment bubbles endogenous to financial markets. Minsky claimed that in prosperous times, when corporate cash flow rises beyond what is needed to pay off debt, a speculative euphoria develops, and soon thereafter debts exceed what borrowers can pay off from their incoming revenues, which in turn produces a financial crisis. As a result of such speculative borrowing bubbles, banks and lenders tighten credit availability, even to companies that can afford loans, and the economy subsequently contracts.
 
Where is robots when we need him? Is that a Minsky graph?

Minsky proposed theories linking financial market fragility, in the normal life cycle of an economy, with speculative investment bubbles endogenous to financial markets. Minsky claimed that in prosperous times, when corporate cash flow rises beyond what is needed to pay off debt, a speculative euphoria develops, and soon thereafter debts exceed what borrowers can pay off from their incoming revenues, which in turn produces a financial crisis. As a result of such speculative borrowing bubbles, banks and lenders tighten credit availability, even to companies that can afford loans, and the economy subsequently contracts.

I've seen it happen before in the last downturn, banks closing in on businesses unfairly causing all sorts of problems.
Let's face it the banks are in control, if they tighten the money supply values will go down and the banks will want people to top up their equity....and down it goes from there.
 
I've seen it happen before in the last downturn, banks closing in on businesses unfairly causing all sorts of problems.
Let's face it the banks are in control, if they tighten the money supply values will go down and the banks will want people to top up their equity....and down it goes from there.

For sure similar situation as the last time insomuch that the banks are tightening their regulatory lending practices. But I note it is only towards the "investors" at the moment trying to curb the growth of the property market and over exposure to the banks to the "investors".

APRA forcing the big 4 banks to have stronger capital ratios would dilute the banks returns on mortgages opening up the way for regional and prudential banks to start risky lending practices??

The increase in capital requirements is likely to result in higher mortgage rates, as the banks charge more to recoup the costs of holding more capital, to maintain their high returns.

Deutsche Bank analyst Andrew Triggs said the banks would raise capital by retaining profits and reprice home loans to protect their profits.

"With an oligopoly market structure dominated by four large rational players, we think the banks will eventually reprice their mortgage books – we estimate 20 to 30 basis points on average required to hold returns on equity flat," he said in a note to clients.

http://www.smh.com.au/business/bank...-threat-of--apra--action-20150430-1mx5aw.html
 
APRA forcing the big 4 banks to have stronger capital ratios would dilute the banks returns on mortgages opening up the way for regional and prudential banks to start risky lending practices??

I believe this relates to the Advanced Basel accrediatation that the big banks have. This allows them to apply their own internal values to some risk weighting variables, resulting in a (possibly, but likely) lower capital requirement.
If they change these parameters, it's likely this will just bring them in-line with other banks who don't have this accreditation.

I'd say the wording of the article is a little off, and should refer to banks with this advanced accreditation.
(Not sure if Bendigo Bank has this yet)


Check this link out:
http://www.australianbankingfinance.com/banking/bendigo-laments-uneven-playing-field/

This section is relevant:
Advanced accreditation and technology

The rate of change won’t slow, said Johanson, hence the bank has invested in Basel II advanced accreditation and new digital and online technologies.

Hirst said the bank needs to have a pristine data set to achieve accreditation. That improved data would bring a better customer experience through the bank having better conversations with its customers. It must also revamp its risk models which would ensure the bank continues to manage its risks well, consistent with its good experiences in the past.

The third advantage of advanced accreditation lies in capital efficiency and how the bank thinks about its capital.

“They all add up to putting us on a much more level playing field,” said Hirst who expects it will take another two years to achieve that accreditation, if everything goes to plan.

Currently the bank is on the standardised approach meaning it must assign a 35 per cent risk weighting to home loans on its book. He couldn’t put a dollar value on the benefit of moving from the standardised approach to the advanced model but envisaged it would enable Bendigo and Adelaide Bank to reduce the risk-weighting on its home loans to similar levels as the major banks of between 15 and 20 per cent.

“To be fair, the major banks do a lot more around modelling their risk and managing their risk. That is the benefit for taking that more robust approach.”

But smaller players such as credit unions can’t afford to go through that process. For Hirst the question is whether the difference between the risk weightings under the standardised and advanced models is appropriate.
 
Banks put brakes on investor lending

ANZ Bank said it would no longer offer discount interest rates to new property investors who did not already have a mortgage over their own home with the bank. National Australia Bank and Commonwealth Bank have also reduced the discounts offered to new investor borrowers. CBA also told mortgage brokers last week it would scrap a $1,000 rebate for new investor borrowers.

Westpac has not changed its loan-to-valuation rules or announced changes to pricing, but this month it said it would apply tougher tests to new property investor borrowers when assessing how they would cope with higher interest rates. It is tightening its lending criteria for "non-resident" home lending, suggesting foreigners will find it harder to borrow.

http://www.smh.com.au/business/bank...akes-on-investor-lending-20150521-gh6imi.html

More likely headline

Banks put valve cover on leaky property bubble
 
Fund managers point the finger at the likely cause of the "crash" ...

Neither fund manager said they were concerned about the idea of a property bubble or swaths of Australians defaulting on their mortgages, unless there was a significant rise in unemployment rates.

"I've been calling the death of the property market for a while; on the metrics of average income to property prices it's at a very high level," Mr Skamvougeras said. "But you're not going to see a property crash without an employment crash."

http://www.smh.com.au/business/bank...t-legs-say-fund-managers-20150521-gh6vi0.html

Clever these hedge fund managers eh?

I wrote this on the 4th May 2012 in this thread.

*GOSH* ... has anyone been paying attention??

JOBS JOBS JOBS ....... IS THE TRIGGER POINT !!!!!!

Sooooooooooooo once again for comedy purposes only. Residential prices in Australia will fall at a faster pace due to job losses. But I only have been banging on about this fact for a couple of years now.

Good to see Steve Keen followers as well as the man himself have moderated their views on the percentile of possible deflation of property.

Let the hatchet job begin.

:banghead:
 
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