Australia's Forthcoming Construction-Led Property Boom

TC,

I understand now where your comment was coming from. Don't totally agree with all your points but some are very valid.

The increase to 10 cities should not be current cities but spread more around the coast in isolated areas. The infrastructure and other projects required to sustain these cities is enormous. The govt has been pushing immigrants to live in rural areas and not cities such as Melbourne and Sydney. The lack of more cities to choose from is part of the problem and why many flock to Sydney and Melbourne.

Like you I'm not for damming the rivers you mention and did specifically mention up North as to keep that out of the equation.

For Japan, I agree about the manufacturing but not about where their food comes from. It is not easy to find foreign food in any of the supermarkets in my area unless you drink alcohol or junk food. There are about 4-5 specialty supermarkets in Japan (Costco) which were originally meant to be foreign based goods but even they now have over 30% of their goods from Japan.

Can easily explain the student situation. Take all those students and think about what they need to live here and how much money they bring with them. I'm partly involved in that industry and roughly every student that stays one year is worth on average about 6K in commissions to one of my businesses per year. Has nothing to do with greed but about arranging everything for them from accommodation to travelling and of course study.

Some students pay up to 100K to do various courses etc and there are a lot of those. Yes students do make up a higher % of permanent residents but why not. Most have studied for 3-4 years and have worked whilst studying to further support themselves.

Without getting into any major discussions the immigration policy does need to be addressed but more on the connecting family policies as the infrastructure to support these people is definitely lacking and failing with quite a few flaws.

Having more cities doesn't have to mean overcrowding Australia and creating environmental problems. It is a big country with a lot of untapped resources isolated areas that could become cities and help make Australia even better.

The key is to set it up the right way.

Y33 said:

For Japan, I agree about the manufacturing but not about where their food comes from. It is not easy to find foreign food in any of the supermarkets in my area unless you drink alcohol or junk food. There are about 4-5 specialty supermarkets in Japan (Costco) which were originally meant to be foreign based goods but even they now have over 30% of their goods from Japan.

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Agriculture in Japan is an embarrasment. I tried to find some figures, but the best I could do was this from 4 years ago,...

http://www.cato.org/pub_display.php?pub_id=5233

Japanese farmers receive 49 billion dollars in subsidies a year. The average Japanese taxpayer would be far better off importing all food and shutting the industry down. But Japan gets a warm and fuzzy feeling by growing their own food.

See ya's.

topcropper said:

Does anyone think someone living in Port Macquarie wants another 200,000 moving in? They don't, or else they'd live in a city in the first place. If all you city people want more people in the cities, then cram them in and leave the rest of the place as is.

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It's all starting here TC. Massive development on the outskirts of Port.

TC,

Now I'm a little confuse (easy to do) from the following statements.

Japan has to manufacture stuff because it imports most of it's food( no where near true)

Japanese farmers receive 49 billion dollars in subsidies a year.

I don't think using Japan was a good example for you as you now appear to be relying on one line in an article from four years ago. There is no explanation of the type of subsidies per year and why. In any given year due to typhoons of which quite a few hit each season it is not hard for 30% of crops to be wiped. Also a lot of these farmers are over 60 and it is like a supplementary pension for them.

Having said that :

3 Japanese rules.

The first rule of Japan is never believe the figures.

The second rule of Japan is never believe the figures.

The third rule of Japan is never believe the figures.

Any data you need on Japan just let me know but here is a small run down of agriculture figures including exports to the USA in the link below.

http://www.nationmaster.com/red/country/ja-japan/agr-agriculture&all=1

Y33 said:

Japan has to manufacture stuff because it imports most of it's food( no where near true)

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Japan does import most of it's food. 60%.
So the 40% that Japan produces costs tens of billions in tax payer subsidies.

https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html

...."A tiny agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. Usually self sufficient in rice, Japan imports about 60% of its food on a caloric basis"......

Y33 said:

Any data you need on Japan just let me know but here is a small run down of agriculture figures including exports to the USA in the link below.

http://www.nationmaster.com/red/country/ja-japan/agr-agriculture&all=1

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Cool. Good link. It's all there.
From the link,


Rice consumption, 8.6 million tonnes.
.......Rice imports, .65 million tonnes.

Wheat consumption, 6.04 million tonnes.
.........Wheat imports, 5.8 million tonnes.

Barley consumption, 1.6 million tonnes.
.......Barley imports, 1.3 million tonnes.

Sorghum consumption, 1.5 million tonnes.
.......Sorghum imports, 1.5 million tonnes.

Corn consumption, 16 million tonnes.
.......Corn imports, 16 million tonnes.

Cotton consumption, 925,000 bales.
.......Cotton imports, 925,000 bales.



There is a tiny amount of vegetables exported to the USA.
[the figure is so tiny, I wonder if it's simply veges going to the US airforce base? I could fit the whole lot on my truck!].

There is one tractor every .02 hectares. [surely this must be including rotary hoes?]
There is one agricultural worker to .6 hectares. [me and dad run 1400]
Average cereal yields are 6.027 tonnes per hectare.

Australia's average cereal yields would be about 2t/h, but on my farm they would be about 5.5 t/h.


That pretty much confirms what I said.
Agriculture in Japan is an embarrasment. The tax payer should be disgusted.



If Japan had of done what Australia did, and let agriculture fend for itself, Japans farmers would have got bigger, more efficient. They'd now be hundreds of hectares in size. It would take no subsidies, so no drain on the tax payer. It can't be fixed now as the farms are tiny, and a few million farmers would lose their jobs.

Japanese agriculture is a noose around the neck of the economy. You have this world class manufacturing industry, with quality and output and efficiency better than any other, and then this backward subsidised farm sector pulling you back down. Sounds like an impressive bit of PR work too from the farm lobby, to keep everyone in the dark.

Japanese consumers are getting screwed twice. First from the multi billion tax bill to keep these old farmers in a job on their tiny plots. Then second, higher food prices once the tarrifs are added to the food.

Pretty much the same applies to Europe, but not quite as bad.


See ya's.





ps. Appologies for the big nasty rant last night. You must realise though that farm subsidies are a vile thing, and are the main enemy of Australian and New Zealand farmers. We will be on easy street if these things are ever gotten rid of, but hard to see. It was the one thing I was really looking forward to from the financial crisis. Once everyone ran out of money, there'd be none left for farm subsidies.
But no. Just ramp up the printing presses.

Y33 said:

Having said that :

3 Japanese rules.

The first rule of Japan is never believe the figures.

The second rule of Japan is never believe the figures.

The third rule of Japan is never believe the figures.

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Y33;585066,much the same as in Australia, only if the real unemployment numbers came out that may well throw a "Spanner" into Mr Rudd shorterm plan, the only ball Japan has in it's court is a psychologial mountain load of cash,unlike Australia with "OPM".
imho willair..

Just within sight of my home I'm noticing 6 blocks that are now being built on, some that were vacant for several years, also in the suburb I'm noticing similar things.

Could there be a construction surge happening right at the moment in Brisbane?

Shadow said:

I don't think it's greedy. Maybe it would be greedier if we said we wanted to keep Australia to ourselves, and allow the over-population to happen only to other countries?

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How do we allow over-population? Imagine if Kevin Rudd told some African or middle east nation to stop breeding so much? If in other parts of the world they are having too many kids, then that's their problem. Common sense says a certain amount of land has a certain carrying capacity.

We shouldn't feel any obligation to take the excess population of some other place. It's pointless anyway, since there is 75 milllion a year being added. We will only stuff our own country in the process.

We would have a stable population without imigration. So would the US, England. China will soon have a stable population. Most of Europe would have a falling population, and Japan a rapidly falling population.

It's not greedy if we say we want a stable population at all. As above, once we get to 60 million we will no longer have any food to export. So who will the countries like Japan, Egypt etc get their food off? At 60 million we will have no food exports, so an even greater amount of mining will have to be done. We will have to be mining 4 times what we are today to provide the same lifestyle as now, with 60 million. Mining is already encrouching on quality farm land. Up until now it's mostly been out in the desert somewhere.


See ya's.

topcropper said:

How do we allow over-population?

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Maybe 'allow' was the wrong word. 'Let' would have been better.

topcropper said:

It's not greedy if we say we want a stable population at all. As above, once we get to 60 million we will no longer have any food to export. So who will the countries like Japan, Egypt etc get their food off? At 60 million we will have no food exports, so an even greater amount of mining will have to be done. We will have to be mining 4 times what we are today to provide the same lifestyle as now, with 60 million. Mining is already encrouching on quality farm land. Up until now it's mostly been out in the desert somewhere.

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Well, we're a long way from 60 million now. And who knows how many people Australia will be able to sustain with the technology that is invented in the next 10 or 20 years. I don't anyway. I'm sure some people thought Australia was overpopulated with 1 million people, then 5 million, then 10 million etc. Look at the population density in Hong Kong or Singapore. Who really knows how many people Australia, and the world, can sustain in the future? Eventually the world really will be full. Hopefully by then we have the technology to populate other planets.

What exactly is a construction led housing boom?

Hi Shadow,

Wouldnt a construction boom actually put downward pressure on housing prices?

This would be because the construction boom would increase the supply of dwellings and assuming the current demand is maintained, there would be no significant forces pushing house prices upwards.

I had always understood that some of the key factors that were causing price growth were the lack of supply (low new construction) and high demand (positive net immigration etc).

Are you saying that the construction boom will actually increase demand more greatly than the resulting increase in supply, or am I missing something obvious?

Shadow said:

Look at the population density in Hong Kong or Singapore. .

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The population density of either is irrelevant. Singapore has a population of 4.5 million people on just less than 70,000 hectares. It imports almost all it's food. It has no oil. No gas. No coal. No anything except the resourcefullness, intelligence and workethic of it's people. And as such, it's one of the wealthiest places on earth as per GDP per capita.

But to hold it up and use it as an example of how populated a place can get..??

It can only sustain it's population by trade. It provides services and manufactures stuff to sell, and buys the food, energy, and commodities off commodity exporting countries like Australia. Singapore is much like Japan, except a more extreme version.

Singapore may only be a tiny island, but it needs the food, water, energy and commodities of maybe hundreds of times as much land to sustain it.

Shadow said:

Who really knows how many people Australia, and the world, can sustain in the future? Eventually the world really will be full. Hopefully by then we have the technology to populate other planets.

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Lets hope we don't find out the population of the world when it's full. Even dumb wild animals can regulate their populations to suit the environment.


See ya's.

topcropper said:

Even dumb wild animals can regulate their populations to suit the environment.

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Smart humans regulate their environment to suit the population.

D Money said:

Hi Shadow,

Wouldnt a construction boom actually put downward pressure on housing prices?

This would be because the construction boom would increase the supply of dwellings and assuming the current demand is maintained, there would be no significant forces pushing house prices upwards.

I had always understood that some of the key factors that were causing price growth were the lack of supply (low new construction) and high demand (positive net immigration etc).

Are you saying that the construction boom will actually increase demand more greatly than the resulting increase in supply, or am I missing something obvious?

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Eventually, when the construction boom is peaking, and when sufficient new stock has been developed, there will be downward pressure on prices.

In the meantime, while the construction boom is gaining momentum, there is a huge amount of new business for developers, tradesmen, furniture stores, electrical stores, banks, brokers, real estate agents etc. This boosts consumer confidence and increases the flow of money in the economy. Everybody is earning more money and so they have more money to buy houses.

You just need to look at the USA. They had a massive construction boom while house prices were going through the roof. The problem is they over-built, and their lending standards deteriorated over the years, resulting in a property crash.

The same could happen here if we make the same mistakes.

hi rockster
answer is still sand weg just the cashed up are buying well under cost and moth balling I have one on my desk at the moment thats a moth ball until we can get funding for them.
its 43 cashed up investors that pooled and bought the site cash and about 50% of original cost da cc ready to gofor them the margin is not a big issue.
as they are buying each unit at cost and then some of the profit back from sales
I see this as comming into the market alot
the investors pool the deposit buy the land and then jv with a developer for 50% of the site using the land as deposit and no debt.
this throws the margin out the window and are very doable.
now buy distressed sites this way and you have 2 out of the three
the lend
the developer and builder and in alot of cases for the developerjv partner the margin runs at about 30% so very doable.
but you have to sand weg the current owners.
and there are alot doing it

Construction boom coming

Looks like it's starting, right on schedule...

http://www.theage.com.au/business/boom-in-new-homes-on-the-way-20091109-i5d7.html

THE scene is set for a home construction boom after a record number of Australians rushed to take advantage of the First Home Owners Boost in September before the scheme was wound back from October...

...Westpac economist Andrew Hanlan said the surge would ignite a construction boom.

''The upswing should kick in late this year and become a key growth engine of the economy through 2010,'' he said.

''It's not only first home buyers. Upgraders are continuing to respond to what are still extremely low interest rates. Finance to upgraders is up 34 per cent so far this year.''

The Bureau of Statistics figures show lending to first home borrowers rose an extraordinary 86 per cent in the year to September, with lending for construction up 84 per cent. Lending to investors is up 18 per cent.

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having a friend just returned from Japan, he did a "farmstay" as part of his Ag degree at Keany.

well, the "farm" was an intensely packed 600 (that's six hundred) square metres with a little two storey with a 60sqm footprint (so 120sqm house all up) and 40sqm carparking so they could "farm" minimum 500sqm.

all built into the side of mt fuji.

the crop yields were insane, but compared to the 60,000ha he was used to, it sure made for some "interesting" comparisons.

Shadow said:

Looks like it's starting, right on schedule...

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Not according to the banks......

Gail Kelly of Westpac said this yesterday...

While Westpac is supporting its existing property developer customers, there would have to be exceptional reasons to support new ones

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The strong housing data surprised everyone. I'd be waiting for another quarter of data before agreeing that a construction boom was happening.

yes there is a vast diff between mum and dad home builders and developers. The big 4 are still shockers and refusing to lend for development. If you are stuck on their books and you jump enough hurdles they will lend just to avoid a toxic asset, but they really dont want to be banks.

Shadow,

Kay and I went to one of those "home town" type places where builders showcase their properties in a new release. It was down the Gold Coast way and we went to have a look to get some ideas for the internal fit-out for Mona Vale now its being tendered. Anyway, couldn't believe the amount of interest the place was getting. There was one design we really liked and it was the grand total of about $170K for the house but was beautiful. The guy running the office for the whole release said they were signing up three a week.

The place was full of balloons, lolly pops, smiles, kids, downsizers and about every demographic in between. The overwhelming emotion that hit me in the place was optimism. All up-beat and head first.

Came away feeling very good about life and then went to Wet & Wild for the day with my boy.

Had a great time and can't wait to get on with my little build now.

Cheers,
Michael

PS I'm one of Gail Kelly's exisiting property developer customers that she's looking after. Got my lend finalised with them last week at the resi rate, headline less 85bp. Stoked with that outcome.

MichaelW said:

There was one design we really liked and it was the grand total of about $170K for the house but was beautiful.

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Just remember Michael that you need to add site costs, floor coverings, landscaping, driveways, window furnishings, and upgrades. How many sqm was the house?

MichaelW said:

The guy running the office for the whole release said they were signing up three a week.

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Doesn't mean that 3 a week will go to site. Some of these will fall over.

MichaelW said:

The place was full of balloons, lolly pops, smiles, kids, downsizers and about every demographic in between. The overwhelming emotion that hit me in the place was optimism. All up-beat and head first.

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I love your optimism mate but stay cool and alert. Be prepared for some hurdles. I too believe the future few years are rosy but will be remaining watchful and aware of potential threats.
Looking forward to your development diary.

RS