The worst writer on property is from Generation Rent/Whine: Terry Ryder

At the end of every year Hotspotting hands out its awards for performance or non-performance in real estate. The 2013 awards were published only a week ago but we already have a serious contender for the prized award for “worst column of the year” for 2014.

Jessica Irvine is the Poor Me Editor for the New Limited Network. Sorry, I’ve checked, she’s the National Economics Editor. I guess after the recent savage culling of journalistic staff there’s only sparse talent left at News Limited.

Irvine was runner-up for our 2013 “Worst Writer on Property” award. The citation reads: Like so many journalists who write poorly on real estate, Irvine is not a property writer. She’s the “national economics editor”. Her articles headlined “Growing divide between rich and poor in the housing market” and “In defence of Generation Rent” were the saddest pieces on real estate in 2013. Apparently Irvine can’t get her act together to achieve home ownership, which is pretty sad for someone in her position. Also one of those who concocted the beat-up about a “bubble”.

Despite her alleged expertise on economics and financial matters, Irvine can’t get her act together to save a home deposit. Several times during 2013 she had a public grizzle about it, because apparently it’s not her fault, it’s the fault of the Federal Government, state governments, the Reserve Bank, investors, overseas buyers and anyone who has the ability she lacks - i.e. the wherewithal to get her act together to buy a piece of real estate.

But the bee is still buzzing around her bonnet because Irvine has started the New Year with another tragic whine about her real estate failure.

Irvine describes herself as a member of Generation Rent. I see her as a member of Generation The-world-owes-me-a-living, the young Australians who don’t want to work, save or make sacrifices to get what they see as their birthright.

Here are a few snapshots from the latest Irvine sob story under the headline “My home owner dream is a nightmare”.

She writes: “It seems a period of below average house price growth, in which we would slowly cobble together that deposit, was just too much to ask for.” What is being suggested here? That the nation should conspire somehow to restrain market forces for as long as it takes for Generation Whine to save money?

The reality is that, before prices started to move in Sydney in 2013, there had been three years in which prices went backwards. And indeed Sydney had 10 years of below-par market performance before the 2013 price rises. That was your chance, Jessica, it’s not the nation’s fault if you blew it.

She writes: “At the national level however, the 9.8% growth in home prices last year was the biggest annual rise since 2009. That was during the depths of the global financial crisis when the Rudd government unleashed its stimulus package, including a doubling of the first homebuyers grant which sent prices soaring by 14%. Really, it should just be called the first home sellers grant, because [all] that money does is push up prices.”

So, after admitting that there were three years between 2009 and 2013 when prices did not grow, we return to oldest furphy in real estate: that the market rise in 2009 was caused by the grant - and therefore grants force up prices.

There was a time when journalists conducted research before touching the keyboard. That was in the days before Generation Bitter and Twisted. For the record, a considerable amount of research was done at the time of the 2009 price rises by multiple sources and they all delivered the same findings: that the rising market had little to do with the grant. The primary reasons were low prices and low interest rates, which together created a dramatic improvement in affordability. The vast majority of buyers at that time were trade-up buyers and investors, with first-home buyers a minor force in the market – i.e. close to 80% of buyers did not have access to the grant which Irvine claims forced up prices.

Then she says: “The Reserve Bank is at it again, dropping its official cash rate to its lowest since 1959 in an attempt to revive lagging household spirits. You might think lower interest rates are good for borrowers, but the higher house prices that result only make the hurdle for homeownership that much higher.”

Good grief, now it’s the RBA’s fault – prices are rising because they unfairly dropped interest rates to boost the property market.

I’ve been watching RBA interest rate decisions and reading the minutes of their monthly meetings for many years and I’m certain of one thing: real estate issues seldom influence the decision-making. There are much larger national issues to consider than the fortunes of the property market when deciding to reduce or increase the cash rate.

Then there’s the mandatory gripe about negative gearing because that’s to blame too, as well as the capital gains tax concession.

So, if I’ve understood it correctly, here’s the Irvine formula for how we can get the poor girl into home ownership. 1. Scrap all first-home-buyer grants because they just make it harder; 2. Push up interest rates because apparently that will make home ownership easier; 3. Force sellers to accept prices below market value because it’s totally unfair to sell for what the market will pay; 4. Slap a capital gains tax on home ownership because that’ll make it better for everyone.

That’s the word from Generation Crackpot.

The word from dispassionate research sources however is quite different. Housing affordability – according to recent data from the Housing Industry Association, the Commonwealth Bank, the Real Estate Institute of Australia, Adelaide Bank, the Reserve Bank, the Australian Bureau of Statistics and Canstar – is the best it’s been for at least ten years.

 


 

Terry Ryder is the founder of hotspotting.com.au

Terry Ryder

Terry Ryder

Terry Ryder is the founder of hotspotting.com.au.

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