Australian Housing: Flying Too Close to the Sun?

Published on
December 18th, 2019
Duration
38 minutes


Australian Housing: Flying Too Close to the Sun?

The Interview ·
Featuring Michael Schneider and Joe Walker

Published on: December 18th, 2019 • Duration: 38 minutes

Is the Australian housing market headed for a spectacular bust or will the bulls continue to charge? Joe Walker, host of The Jolly Swagman Podcast, sits down with Michael Schneider, special situations partner at Eschaton Funds, to discuss the litany of irrational behavior in property valuations, politics, regulatory efforts, monetary policy, the foreign investment fallacy, debt sustainability, and the prospect of a sustainable recovery in Australia’s buoyant housing market. Filmed on December 2, 2019 in Sydney, Australia.

Comments

Transcript

  • GS
    G S.
    18 February 2020 @ 10:41
    dear bears...If you own a house in sydney or Melbourne within 10km of the city and feel it will drop over the next five years ...i will buy your house at todays price with a 10% deposit and settle in 5 years. During those 5 years you can stay in your house. if you are right, your house will be worth a lot less than what im paying you for it.
  • RE
    Ryan E.
    29 January 2020 @ 10:11
    Great interview, Can we have a Canadian version of this please.
  • JL
    Jim L.
    18 January 2020 @ 07:39
    No shortage of bears out there... rinse and repeat
  • PS
    Paul S.
    19 December 2019 @ 09:11
    Why anyone lives in Sydney or even worse, Melbourne paying those prices on any type of 'normal' wage is a complete mystery. The suburban misery of a mortgage 8 times your highly taxed income and an hour commute at some stage must outweigh the boomer fueled dreams of untold property wealth.
    • TM
      The-First-James M.
      19 December 2019 @ 16:53
      If one lives in the outer suburbs of Sydney and Melbourne, a one hour commute could be considered fortuitous...
    • MB
      Marko B.
      19 December 2019 @ 22:16
      From what I can gather, there are two main drivers - one is greed and the other is fear of retiring without a roof over the head, with the later one being much more prevalent in my opinion. Most of the ordinary people who do not have broad understanding of investing and different options of protecting purchasing power of one's savings see housing as the only option they have. Of course, they do not understand that renting to the rest of their lives may be a better option that owning a "paid off" house since they do not take into account all the costs associated with ownership. I clearly remember the end of 2017 in Vancouver before the tighter mortgage rules were about to come in effect at the beginning of 2018 - there was palpable fear in the air and people were scrambling to buy anything the were able to get their hands on because that was in their minds that was their last chance to ever own a home. Effects of this can clearly be seen in the chart of condo prices.
    • NT
      Nathan T.
      21 December 2019 @ 10:39
      where do you live Paul S?
    • EA
      Edward A.
      18 January 2020 @ 02:16
      Buying completely agree, however renting isn't remotely expensive compared with other cities globally. We live in a large one bed apartment 8km from the CBD 4 minute walk from the beach and paying AUD$1,800 in Melbourne total. It's an incredible city, wages are high (bartenders make A$25 per hour). Far higher living standards than anywhere in the UK or Canada that I have ever experienced.
    • JL
      Jim L.
      18 January 2020 @ 07:38
      Some mystery - I and many like me, can literally only live in Sydney for work. We also get paid well enough to keep us here. If you had asked how anyone earning minimum wage or close to it is here I would have agreed.
  • AB
    Alan B.
    6 January 2020 @ 23:20
    Great interview. Thanks Joe, and thanks RV :)
  • JS
    John S.
    25 December 2019 @ 23:55
    really enjoyed the conversation. Given the oversupply of apartments this will be exacerbated by the flammable cladding and poor construction problems associated with these apartments which will deter buyers.
  • GG
    Gary G.
    23 December 2019 @ 18:30
    Super!!
  • TS
    Tom S.
    22 December 2019 @ 04:54
    Great interview - balanced. Thanks.
  • BA
    Bruce A.
    19 December 2019 @ 04:56
    All good stuff, at least until the question 'Is there a way to trade this?'. No answer that I could hear. Banks are already beaten down but I suppose shorting them is a possibility. The ASX has too many resources companies to go negative the index (unless you view the global 'risk on' of late as temporary). Reserve bank is easing and so far that easy positioning has supported assets across the board. Retail is being hammered left/right/centre so maybe the feedback loop into the economy is best played through a short (or underweight) retail.
    • TM
      The-First-James M.
      19 December 2019 @ 16:51
      Short AUD vs Gold may be the way (in other words, if you live in Australia, exchange some of your AUD for Gold). Premise is that the RBA and Australian Government appear keen to sustain the property bubble at all costs, so this will ultimately hit the Currency (I would argue it already has and is doing so).
    • BA
      Bruce A.
      19 December 2019 @ 22:01
      Yes TM, I've been doing just that (exchanging AUD for Gold and also industrial metals and energy exposures). cheers
    • DR
      Dave R.
      21 December 2019 @ 07:18
      And/or Bitcoin :)
  • CS
    CMC S.
    18 December 2019 @ 09:31
    Now thats a good interview. Some smart people talking smart things
    • MW
      Marcus W.
      20 December 2019 @ 13:19
      this was an epic discussion
  • RA
    Ross A.
    20 December 2019 @ 05:48
    Re Comment at approx 15 minutes to go; I think "First Home Buyer" Grants push housing prices up more than the grant as the grant is used to increase a buyer's deposit. So a 10K grant creates 100K extra in borrowing 'power'.
  • CH
    Charles H.
    19 December 2019 @ 20:47
    Great discussion, thanks.
  • JH
    Jason H.
    19 December 2019 @ 08:08
    loving this theme of the week stuff, they have all been so interesting. keep up the good work 😁
  • MR
    Maxim R.
    19 December 2019 @ 03:41
    Great interview guys, thank you
  • KE
    Kathryn E.
    18 December 2019 @ 22:23
    Great interview. Thanks RV
  • TT
    Tokyo T.
    18 December 2019 @ 10:07
    Joe's podcast is one of the best. He is the only person I know that is incorporating the psychodynamic drivers of markets into his content by citing academic research, world-class guests, and long-format discussions. We all have access to unlimited financial data points; the real value is in understanding how people and groups react to it.