Another column, another blank screen.
I spent yesterday morning shifting book boxes from one storage shed to another. As I write, my back is killing me, a salutary reminder that I may not be as young as I once was!
I saw from the paper that Lloyd and June Piddington have celebrated their 65th wedding anniversary. Sixty five years! That’s a very long time indeed. My congratulations.
By the nature of their business, the Piddingtons have been entwined with Armidale life for a very long time. In my own case, they have buried grandparents, parents, aunts and uncles.
A family death is always stressful. The thing that I most remember is the calm kindness with which Lloyd and other family members handled the inevitable problems.
Down here in Sydney, the news that the NSW economy is in the slow lane nationally has attracted some attention. The problem from my perspective is that there is no such thing as a NSW economy.
To the good folk in the NSW Treasury the concept makes some sense because they have to estimate tax revenues. For the rest of us, NSW is increasingly little more than lines on a map providing a notional unity to an increasingly disparate territory.
Because of its size, Sydney dominates the numbers. Even in Sydney, there are considerable variations across the city. As we move outside, the variance becomes greater.
Take real estate.
In Sydney, house values have held up, but sales are down. The value of transactions is down nine per cent compared to the five year average.
In the sea change regions of the Northern Rivers and parts of the Mid North Coast, the value of transactions is down 30 per cent on the same basis. By contrast, the mining areas of the Hunter or areas around the ACT are trending above average.
Three areas with three very different performances.
In Sydney, real estate continues to dominate many dinner party conversations. The prospect of quick profit stays in mind, as it has done since the first days of European settlement. However, with Sydney real estate flat, home purchases in the US have become the new investment topic.
There are good practical reasons for this. Both countries have stuffed up their real estate markets.
In the US, rules that limit bank recovery to just the value of the property in conjunction with losses associated with the end of the property bubble have made banks unwilling to lend, while people are also reluctant to invest. House prices have fallen much more than rents, making for very good rental yields.
In NSW, by contrast, it is expensive to develop land or to build houses. Residential building has been low for some time. This leads to high prices and low rental yields; the prospect of capital appreciation dominates expected returns.
With capital appreciation uncertain, people are unwilling to buy even though Australian banks will lend. With the stock market also uncertain and interest yields quite low, some are now investing in US real estate to take advantage of the high rental yields.
With gain comes the risk of pain. Some will be hurt. However, there is a more immediate problem from my perspective.
We rent in Sydney, part of an increasing group forced to do so because of the very high real estate prices. This is a bit of a nightmare, one that is rapidly becoming worse. There simply aren’t a lot of long term lets of the type we want.
We have moved four times over the last five years, with another move possible next May. Each time rents have increased.
Listening to people chat about US housing investment, I just think of what it means for local rents. I also think about my back!
Like other Sydney costs, storage costs have been rising. We are therefore trying to reduce material in store to fit into a smaller and cheaper storage area.
This is complicated by the fact that last time we moved, we moved into a smaller house. This meant more stuff to store.
This morning I have the last twenty boxes to check and move. Oh my aching back!
Note to readers: This post appeared as a column in the Armidale Express on 26 October 2011. I am repeating the columns here with a lag because the Express columns are not on line. You can see all the columns by clicking here for 2009, here for 2010, here for 2011.