The story so far

Friday, 5 November 2010

One year today!

We arrived in Australia, one year ago today! It's been quite hard work, understandably as this year we have:
  • Bought two cars, one dead, one alive but hurting.
  • Got iPhones (Only 3GS, but Yeeehawww!)
  • Secured ourselves somewhere to live (temporarily)
  • Had three different jobs between us
  • Enrolled Zoe in School and seen her rise to the dizzy heights of class Student Representative Council rep.
  • Enrolled Esme in two pre-schools
  • Seen both kids learn to swim front crawl (Zoe with breathing, Esme without)
  • Enrolled Zoe in Little Nippers
  • Drank 14 bottles of Whiskey
  • Passed one Physics exam with a high distinction (Well done Hannah)
  • ...oh and I almost forgot, Moved our entire lives to the other side of the world!
Targets for the current year:
  • Dispose of the frog which has returned outside our window
  • Pass one more Physics exam
  • Buy a house
  • Buy my first BBQ
  • Get fit and healthy
  • Brew beer
  • Watch England win the Ashes
  • Have some people from England to say for the first time. (Requests welcome)
  • Enrol Esme into School
  • Enrol Esme into Nippers
In theory, some need to happen in that order. If we don't get rid of the frog, Hannah won't sleep, if Hannah doesn't sleep she won't pass her exam, if she doesn't pass her exam, she won't secure the job, if she doesn't secure the job, we can't (shouldn't) buy a house, if we don't buy a house, we'll be saving for a house and all other bets are off.

The funny thing is, the frog is the only one who doesn't seem to be letting his performance drop under the pressure and everything relies on him.

The house situation is improving though. probably because most Australians have realised that their beliefs about Australia being "different" and their flippant "House prices won't fall, this is Sydney" are a fallacy. Last time I looked, the housing market in Australia was remarkable similar to the UK. People buy houses. Usually using borrowed money. Any supposed differences are small in comparison to the similarities.

The reason always cited is that there is an under supply and a rising population. So what? Anyone who thinks there is not a housing bubble in Australia and that prices will not fall is failing to grasp the basics of supply and demand. In this case, I think what is being missed, as it was in the UK, is that demand is not just a function of people's aspiration to own a house but also needs to be backed by financing to make that aspiration reality. As the rest of the world looks on and sees what is undeniably a housing bubble, the cost of finance is rising, Australians are struggling to meet their repayments and banks are becoming more reluctant to fund mortgages and guess what? Prices actually fell in Sydney last month by 0.9%

In fact, one of the major differences in Australia is that landlords actually get a tax break for owning second homes and renting them out at a loss. What this does is encourages people to think that making a loss on a rental property is a good thing and encourages people to invest in houses in the hope that they will rise in value, speculation on capital appreciation as it could be called. This is definitely a recipe for a speculative bubble because rising prices encourage investors which causes prices to rise until... when the prices stop rising and no more credit is available, the pressure to sell and reduce exposure to negative yields and capital losses grows exponentially.

Of course, that may not happen, plenty of people have lots of equity in their homes and plenty are not struggling. Hannah and I are still in two minds. Will the supposed resource boom cause a slow deflation of the housing bubble or will it pop like it did in the rest of the world? If the former, we will be right to buy now as it's not an investment, but long term stability we are looking for. If the latter, it could be a negative equity ball and chain around our neck, just when the economy goes into nosedive and my job becomes less secure.

I suspect that the landing will be soft, even stagnant but that is by no means guaranteed. I am almost persuading myself that buying now is madness. In three to six months, we will have a good idea of what has happened but do we want to go into another year's rental contract?.......Watch this space!


  1. I totally agree with you. Living in Australia is hard. When I arrived at Australia I was struggling to find a job but I didn't quit in my Job search. Now I'm currently employed in an IT company here.

  2. Nice work Matt, glad it's working out for you too. The eventual benefits far outweigh the sacrifices...if only it would stop raining!

  3. I want to hear more about your frog. What's his motivation? And can you transplant him to the window of a house you want to buy? Pop him back home after? Or, I believe you lived in France, problem with a frog, you know what to brew... I mean do! Glad you're all getting along okay, my best.