Terry Ryder Strikes Again!

A local Western Burbs real estate agent, Zoe Diss, is desperate to break the home-buyer's strike on her patch. To do this, she's taken to sending articles by Terry Ryder, of the Australian, to her mailing list -- articles by a journalist who, one can only assume, is in the twighlight of his career. Mr Ryder, in one of his latest columns, has either been unable or unwilling to conduct any research of his own, preferring to fall back on some recent work by another (admittedly, part-time) journalist, Michael Matusik. You'd have thought that Mr Ryder, in choosing not to conduct his own research might have picked a reliable source to draw on, but he chose instead, to lean on Queensland's Chief Property Cheerleader, a man who has more than a vested interest in seeing the property boom continue for the forseeable future. It's hard to know whether Matusik is being disingenuous in his utterances or whether he's genuinely ignorant. Anyhow, Terry Ryder's latest article headlined:

Hysterical Bubble Talk Just A Load Of Hot Air

..goes through a list of reasons (all trotted out by Matusik, recently) why the Aussie property market won't crash. I've already knocked most of these reasons over in a past blog, but there are a few presented in Ryder's article that Australians can easily understand for themselves are downright rubbish -- it may just take me to highlight why this is the case.

One of Matusik's favourite comparisons is the US property market, because it has 'non-recourse' mortgages i.e. if you get fed up paying your mortgage over there then you can just hand back the keys and you have no further obligations to the lender. There's no doubt that this isn't great for banks and that this 'easy come, easy go' policy (only for those who don't have any equity in their home) can exacerbate a property glut. However, what Matusik fails to point out is that the Irish housing market, which has full-recourse mortgages (exactly the same as Australia does) has completely melted down and is in easily as bad shape, if not worse, than the US's market. So much for recourse over non-recourse, then. Does Matusik not know this? Or is this just too inconvenient a truth for him? Irrespective of the reasons for this oversight, it doesn't do his credibility a great deal of favours.

Back to Terry Ryder briefly: he claims ".... and, notably, Reserve Bank governor Glenn Stevens, agree we don’t have a price bubble...."
No shit, Sherlock! As if Glenn Stevens is going to admit to a property bubble on his watch. How many people in his position would admit to that while in office and then risk those comments setting in motion a house price crash. Clearly the journalistic threshold at Ryder's paper is lower than many imagine. If anyone out there is currently unemployed and fancies a crack at journalism, it seems you could do worse than apply to The Australian for a job.

Back to the inimitable Matusik whose anti-bubble arguments are so thin, that a one-year-old wielding a soft toy could poke holes in them:

He says: "...also odd to claim our homes are unaffordable when we have, still, one of the highest home ownership rates on the planet.."
What has high home ownership got to do with anything? He doesn't explain -- it's just left hanging out there as though the answer were obvious. His own paper, the Courier Mail, published an article earlier in the week, saying that a recent survey found that a staggering 40% of Queensland families were struggling to make ends meet given the recent hike in the price of just about everything non-discretionary. You add that claim to Matusik's own claim that "we have one of the highest home ownership rates on the planet" and it's hardly reason to crack open the Moet & Chandon -- in fact, it's the complete opposite -- it's time to be deeply concerned, particularly in the context of the future property prices.

And yet more rubbish from Matusik: "As long as our unemployment rate stays below 8 per cent (it’s currently around 5 per cent and steady), then falls in property values are unlikely."
Where he dug this up from is beyond me and he doesn't identify his source -- quite possibly, he dreamed it one night. Generally, I like to deal in facts though, so let me quote this in response: the US housing market peaked in July 2006 (source: the Case-Shiller Index), at which time US unemployment was around 5%. A full year later, the GFC kicked off, triggered by the falls in house prices. Right, there you have two 'Matusik myths' knocked straight over, the other being that you need some or other 'catalyst' to set in motion a price crash. Here the price falls were the catalyst for the GFC, rather than the other way round, as imagined by Queensland's premier property guru.

There's nothing like avoiding the facts when you're a journalist (not to mention doing some real research) and just plumping for a load of information (however dubious) which supports your particular viewpoint. Hats off, Terry Ryder, you're a credit (or perhaps that's debit?) to your profession.