NO! Now move on or read on :).
This post began life as a comment to an article by Michael Yardney: “Is 2011 the right time to invest in real estate?“. The comment was too large for their system so I decided to post the whole thing here. Michael sees “five green lights to selectively invest in now, in the early part of 2011″. I beg to differ…
It’s difficult to find a point where I have any agreement at all with the article! On point 3 – demographics – I agree with the premise but hardly the conclusions! Here are my thoughts, point by point.
1. The Australia economy is stable?
Last year, Queensland began experiencing the largest number of bankruptcies for many years. Is this stable? The cracks are showing WA too I hear. It does seem rather odd that the resource states of QLD and WA are both hitting the skids ahead of the pack. I don’t know what it is but there’s no denying it.
2. Increase demand but lack of supply?
Come to Queensland! The Brisbane rental market has the highest vacancy rate for some months. Gold and Sunshine coasts are in even worse shape.
3. Demographics – smaller households will push up property prices and rentals?
Well, I agree that there has been a growing trend towards smaller households, however your conclusion is trite. This will not lead to higher house prices and rents. Not now. In an ordinary market, an increase in demand without a sufficient increase in supply would indeed put upward pressure on prices. However, we do not live in ordinary times. We live in most extraordinary times. We are living at the top of the greatest credit bubble in history. Supply and demand are not driving house prices. House prices are a function of credit growth – almost exclusively. Other factors such as supply/demand are swamped by the gargantuan volumes of credit that people, banks and governments have thrown at this over the last decade (and longer). At appears that, in a credit boom, incomes (salaries/wages) do not keep up with interest repayments as the public take on larger and larger debts. I’m not entirely sure why they don’t keep up, but they certainly don’t. Once you approach a point where people struggle to take on more debt, you get a slowing of credit growth – disleveraging. Subsequently, you are in for credit contraction. This is when prices will come under extreme downward pressure despite what the underlying supply/demand may be. Credit contraction is associated with recessions and depressions and increases in unemployment etc. This leads to folks changing their minds about how much debt to take on, which leads to further credit contraction. Also people will change their minds about how many people can comfortably live in a house. People will go into crisis mode. Like in the floods in Brisbane, people will stay with friends and family – some temporarily and others on a more permanent basis. Once the delusion of the “ever increasing house price” is broken, people will not forget for a least a generation or perhaps two. This being the biggest credit expansion in history, I feel that the contraction will not be one forgotten quickly. This will be worse than the great Melbourne land boom of the 1890s.
4. Rents will strengthen in 2010?
I presume you mean in 2011, because they declined in 2010 ;). In Brisbane, rents have already been declining for a few months as vacancy rates have increased. This is particularly telling in bayside area of Wynnum/Manly. Places which previously would have rented for $750/week are going for $600. I was stunned that one spectacular place at Manly went for $600. It was over my budget though unfortunately. Other places that remain over-priced have been sitting their for months! On the cheaper end, 2 years ago it was almost impossible to find a house in Wynnum below $400/week but now there are many to choose from – with quite a few near the foreshore. The floods will certainly cause a temporary demand shock to the rental market in Brisbane but many flood victims have been able to get back into their homes despite flood damage on lower levels. Others will stay with family and friends – they still have their mortgages to pay! There are only 900 flood affected homes that are uninhabitable. That figure is across the whole of Brisbane. Some of those houses that have been sitting there for weeks and months might finally be rented to a flooder – until their home is cleaned up and rebuilt. Most will make their homes habitable within 6 months and so there’ll be a supply shock in the middle of the year.
5. Steady interest rates?
It’s difficult to know what will happen here but “stable” will hardly be a word to accurately describe it! The RBA might might not increase or decrease rates for a few months but would that lead to steady variable mortgage rates? Certainly not if our banks and other ADIs cannot fathom their funding issues. Personally, I’d imagine that the RBA will be concerned with slowing credit growth and will begin cutting the cash rate by the middle of the year. They will struggle to meet their “charter” but will fail on all three points in time because they have been complicit in growing this credit bubble with it’s false feeling of prosperity and wealth.
For those unfamiliar, the RBA charter is:
- a. the stability of the currency of Australia
- b. the maintenance of full employment in Australia
- c. the economic prosperity and welfare of the people of Australia
We are in a very precarious situation. The damage is already done (i.e. the credit bubble has been blown to the point it can take no more air). Private demand for credit cannot blow this bubble higher at this point. This is why federal and state governments have been stepping in with massive intervention which they tell us will “help” affordability:
- Grants, including the first home “owner” boost
- Stamp duty concessions
- Purchasing mortgages from the banks – another 4 billion recently
- Allowing the banks to issue covered bonds. Something the banks have requesting from the regulator – APRA – for years. APRA has repeatedly refused these requests, explaining that covered bonds put depositors funds in jeopardy in the event of insolvency. Our PM, Julia Gillard, has used her special privilege as PM to override the usual requirement of an investigative report when changes are made to the banking act. Have you heard that there’s a national emergency our banking system that would require such measures? No, I’m sure you’ve only heard that the banks are strong…
The government are taking desperate measures in an attempt to keep interest rates down (e.g. covered bonds). I don’t know exactly where we go from here or how it will pan out. I do know that it will not be good. Not for savers like myself or for debtors like Michael Yardney (assuming he eats his own dog food and borrows to invest in property). However, we do know that ZIRP (Zero Interest Rate Policy, aka 0% cash rate) isn’t much help at this point, it does however seem to delay the inevitable so we can be fairly certain that it will arrive before long. Beware though: when we kick the can down the road, it becomes more and more leaden – the final kick may break our foot! The US and UK are prime examples of how ZIRP does not work, with house prices continuing to decline despite the policy and more declines predicted this year. The US have even tried to copy our “First Home Owner Grant/Boost” but with little success. There is no magic sauce that can fix this.
Now is the worst time in history to take on debt.
I highly recommend MacroBusiness to keep abreast of news related to the Australian property bubble and the economy in general.
I’ve been asked for an update of my experiences with my HP Pavilion dv6 3042TX – in particular with Ubuntu. A reader has found that this notebook can now be purchased here in Australia for $1,299. That is a fine price indeed! At that price, I would have considered “self insuring” and not spending the addition $200 or so on an extended warranty. However, I must say that I sometimes have regrets about not getting a Mac. Here are some of my experiences and advice:
- Aesthetics are good. Quite a good looking laptop. Not as nice as the MacBook Pro.
- Quad-core. 8G RAM. 1G graphics.
- The keyboard is fine (our reader had heard otherwise). Compared with MBP it even has PgUp and PgDn keys :)
- Touchpad is fine (again, not sure why our reader would have heard otherwise). Not quite as nice as the MacBook Pro touchpad though – particularly for scrolling.
- Some ports that MacBooks don’t have: HDMI out, eSATA out, fingerprint reader, blu-ray.
- Running GeekBench on Ubuntu 10.10 can yeld up to 6300 so I assume that it is more performant than Windows 7 (which gets about 5600).
- Battery life is only 1.5hr – just for light web-browsing tasks
- When running Ubuntu 64-bit you will run into the 100% CPU problem caused by the npviewer.bin. AFAIK it’s a program that helps interoperate with the 32-bit Adobe Flash plugin because there’s no 64-bit one for Linux yet…
- The fingerprint reader isn’t used for authentication out-of-the-box on Ubuntu 10.10 although I haven’t searched for any solution (pain threshold too low).
- It runs hot. Even when doing little cpu-intensive work the fans turns on and it sounds like it’s going to take off! I’ve had one or two blue-screens of death which I imagine are related to the heat. Lately I’ve been using FlashBlock which seems to have improved things somewhat.
- With Ubuntu 10.10 after resuming from hibernate I get odd graphics flickering “effects” which is particularly bad when dragging or playing video. Basically you will end up rebooting. I have found no solution for this.
- With Ubuntu 10.10 the touchpad will not work well. Dragging sends the pointer crazy and right click does not work at all. I found a solution https://bugs.launchpad.net/ubuntu/maverick/+source/linux/+bug/582809/comments/94 but unfortunately now the pointer moves too slowly and increasing the sensitivity does not work.
Stick with Ubuntu 10.04
The touchpad problems didn’t happen with Ubuntu 10.04 and I’m fairly certain that the screen flickering following a resume didn’t occur either. So if you’re going to install Ubuntu, I’d currently recommend 10.04.
Run Windows 7 (with Ubuntu 10.10 in a box)
This is the option I’ve currently adopted. This way I have no problems with Google Chrome and the npviewer.bin because there’s a 64-bit version of flash. It also has other good effects such as being able to run the latest version of Skype, have my fingerprint reader work for logging in (this is quite a time saver because I tend to use strong passwords). Of course, to get software development done I installed Ubuntu 10.10 with VirtualBox. In this way I have no problems with the touchpad. Running the operating system that the manufacturer intended has certainly caused less headaches (and time wasters). Using VirtualBox seems quite performant and I’m not stuck with a compromise such as Cygwin.
Plea to Canoncial and manufacturers
Perhaps it’s just that 10.10 is a disaster (at least running native/raw on HP hardware) but I can’t help but think that it’s imperative that Canonical find a way to have manufacturers buy into Ubuntu and test/preinstall it on their hardware. There was a time when Dell were doing this at least in the US and EU (but even then only on a small subset of their range). I used to enjoy the days of searching for solutions for hardware problems, diving into configuration files and configuring X etc. I learnt a lot through those experiences. However, now that I’m older I suppose, I value my time more. I hear this argument from Apple fan boys all the time. Unfortunately it’s true. I do think that Linux and Ubuntu in particular is a better software development platform. The weath of software available using APT is a big part of that. Also that APT uses binary packages. Easy software installations isn’t so important if you don’t experiment with new programming languages and libraries etc that often.
Buy a Mac :)
The other option is, of course, to buy a MacBook. Since I already have an iMac in case I need more power, I’ve been thinking about purchasing a 11″ MacBook Air next year. I’ve tested one in-store an it seems quite nimble for such a little beast and the screen resolution is the same as my current laptop – 1366×768. I’d certainly have no more need for my 11.6″ netbook (which won’t run Ubuntu Unity btw because of gma500/poulbo graphics driver issues – sigh!). Perhaps the 11″ wouldn’t cut it for Java development though. I haven’t tried IntelliJ on it in-store yet. A fine but more expensive option is the 13″ MacBook Air. The same resolution as a 15″ MacBook Pro. Currently the 13″ MacBook Air will set up back $2,078.00 including 4G RAM and 3 year warranty. If I had to choose again right now, I’d be picking between 11 and 13 inch MacBook Airs.
Since I won’t be purchasing a new notebook until next year, I am hoping that the rumoured April MacBook Pro update will make the decision easier. Hoping for higher resolution displays like MacBook Air, cheaper flash/ssd storage option, quad-cores, Mac OS X Lion and cheaper 8G RAM option. Hopefully a combination of Apple and a rising AUD can deliver. It’s quite possible that the AUD could come crashing down before then though :(.
Robert C. Martin (aka Uncle Bob) has written a provocative article, What Killed Waterfall Could Kill Agile. Besides its main trust, it also contains some interesting historical tidbits in the history of the agile movement.
Here’ my 2c. Disclaimer/background: programming since age 11, interested in “big” methods in the 90s, XP since 1999 and became a CSM 2 years ago.
The problem isn’t certification per se. The CSM after all is just a 2 day training course! It’s hard to argue that education is detrimental. There certainly is a problem with what Bob calls “elitism” or (better) authority without responsibility. Perhaps there’s also a problem with how organisations are perceiving the CSM and role of Scrum Master. I haven’t experienced it myself. In my case, I have noted serious scepticism about the usefulness of the CSM. As long as it is merely considered a 2 two day training program then I don’t think it does any harm (it merely does what a 2 day training course can do). No doubt it was marketing genius to make attending a course “qualify” someone for a certificate :). I took the course when I was flush with cash from working in the UK. I attended in order to show my interest in Scrum/XP to potential clients and team mates. I did also hope to learn something at the course :). I did note that the course was full project-management types… to the degree that I felt somewhat out of place – so I think I know where Bob is coming from.
Agile has become a meaningless term. Agile is dying. Everyone is doing agile. The “agile” label is slapped on everything. Once slapped on, it tends to provide a force fields against criticism. Often this is an attempt to get something for nothing (“but you said it would be faster if we had 100% test coverage”) or just simply popularism. One of the worst things about Agile is the unquestioning, unthinking fanboyism that abounds. Agile has become the status quo.
As a young programmer in the 90s I was entranced by “object-oriented analysis and design” and the glittering lights of the 3 amigos – their respective methodologies and their (Rational) Unified Process. However, by the late 90s, it was the fight against bureaucracy that drew me to XP and the little white book. It was the questioning of the status-quo of the “big” methodologies. Giving working code the respect it deserves.
What’s not important is that we overemphasise a word, “agile”, that has already become synonymous with software development or software engineering. What is important is the following:
- Work as productively and economically as we know how
- Continuously learn in order to hone and master our skills. Yes, you will have to learn new programming languages :). I recommend Haskell, OCaml and Erlang.
- As always, keep a sceptical eye out and do not to fall prey to dogma.
Most people fail on that last point. Don’t.
According to the latest report from Australian Property Monitors (APM), Brisbane house prices are -1.7% in the September quarter and +3.3% for the year to September. Unit prices are in worse shape at -2.8% in the September quarter and -5.3% in the year to September. Gross Rental Yield also appears to be under pressure, standing at 4.41% which is -4.4% over the year to September. Rents are flat in Brisbane both for houses and units.
If the next quarter is similar to this quarter for houses prices, then they’ll end up being flat year-on-year. This will confirm that the trend started in 2008 has reaffirmed itself. Last year with the boost to the First Home Owner’s Grant (FHOG), house prices rose 7.7% according to APM. However, in 2008, house prices were flat at 0.4%. With Consumer Price Inflation (CPI) running at about 3%, house prices are no longer keeping up with inflation i.e. they are falling in real terms.
I’m writing this from my new laptop! Stop the presses: it’s not a Mac! :) In fact, I’m trying out Windows Live Writer to publish this post…
HP Pavilion dv6 3042TX
Intel i7-720QM quad-core processor 1.6GHz turbo to 2.8GHz
8G DDR3 SDRAM
15.6" HP BrightView LED display @ 1366×768
ATI Mobility Radeon HD 5650 with 1G DDR3 dedicated graphics memory
640G HDD 5400RPM
6 cell battery – only around 1.5 hours battery life :(
Windows 7 Home Premium x64
Got it from Officeworks who do a 5% off any advertised price. The latest Clive Peter’s catalogue has it for $1799 – that’s $200 off the RRP. The Clive Peter’s deal also threw in a wireless MS mouse but Officeworks wouldn’t include any bonuses in their price-match. No matter as I have a mouse and Clive Peters have only just had their doors closed by the administrators! The price of the laptop itself was $1709.05 and to that I added an extended warranty to cover me for 3 years at $189, bringing the total price to $1898.05. I noticed that Harvey Norman are offering 16% off all desktops and laptops this weekend so it might be possible to get a slightly better deal from them (saving an additional $30 or so – no idea about their extended warranty though – maybe you’d lose there). The Geekbench score of this thing is as high as 5600.
I also considered the new MacBook Pro 15". Because of the price, it seems only possible to consider the bottom of the range MacBook Pro starting at $2199. On the upside, the cheapest new MacBook Pro 15" is faster than the most expensive older MacBook Pro 17" (according to Geekbench). It’s a dual core i5 2.4GHz machine. I was very disappointed that Apple didn’t make them quad core but I suppose it’s a compromise with battery life – and profit margin ;). Primate Labs lists the Geekbench score of this laptop at 4806 compared to the amazing 5600 that I’m seeing on the 3042TX (according to Geekbench this makes my notebook faster that the most expensive MacBook Pro 17"). The Apple build quality is better but the new HP’s are really getting there. The Mac’s display is more high-res at 1400×900 compared to the HP’s 1366×768. However, it only comes with 4G of RAM by default and a HDD half the size at 320G. Not that it’s really a big deal to me but the MacBook only comes with a 256M graphics card, no Blu-ray and no fingerprint reader. I do miss the vertical screen real estate with the HP but I think it’s a worthwhile compromise. I also miss the MagSafe power port – with the Pavilion you need it connected to the power more often and since the power plug sticks out so far, it’s awkward and relatively easy to get it caught on the lounge/couch/sofa or something. I’ve already got an iMac 27" + 8G of RAM with Snow Leopard so the other upside with this notebook is that I get a copy of Windows 7 should I need to do any .NET development. I’m already taking a look at PowerShell that came preinstalled (many Unix-like aliases are provided but ‘ls’ still looks like a dodgy old ‘DIR’ command – yes, yes – I’m sure there’s heaps of good stuff in there like object-valued pipelines). The extended 3yr warranty for the MacBook is a staggering $579! That would make a total of $2778. If I up-spec the RAM to 8G and the HDD to a 500G 5400rpm (not quite the 640G that I have) and the price leaps to $3,477.99 – very nearly twice as much as what I paid and still no Blu-ray, HDMI out or 1G graphics card… As you can imagine, it is a very difficult price to justify even for the Apple build quality, higher resolution display, battery life and MagSafe power adapter. Don’t worry about the OS, I won’t be using Windows 7 day-to-day. I’ll get all my *nix goodness by installing Ubuntu Lucid Lynx shortly. Then I’ll be able to apt-get all my favourite applications. Apt/dpkg is better than MacPorts – binary packaging is a must for anyone who values their time – something I learned from a year or two with Gentoo prior to making the move to Ubuntu. Also keen to see how OpenSolaris might work out as a notebook OS – all that GNU goodness with ZFS too. I recently heard that FreeBSD has ZFS too so perhaps I should go that way. I do tend to prefer BSD/MIT/X11 over GPL/LGPL.
The unique thing about Bzr (compared with say Mercurial) seems to be that the community has developed tools for some common workflows.
I’m still using Mercurial for my personal files at home. Since I use Linux as my primary development platform, Git is getting the upper hand for me. I’ll have to give hg2git a try (this will give me the opportunity to finally prune my /Photos directory). The git-svn support is useful when clients are using SVN and you want to work from your laptop. Also the GitHub is pretty cool. I’ve only played around with it but it has paid accounts that could be used for off-site backup and for possibly for source code delivery to clients. I hear that Git works great on Mac but last I heard the support on Windows was still lacking. Git works in cygwin with a native port on the way. I haven’t used Windows for development for a while but always used to install cygwin when I did. However, that’s not necessarily a great solution for regular Windows/.NET guys. If I was doing a .NET project, I’d probably stick with Subversion – git-svn is always there for disconnected development.
I wonder if there are bzr style workflow solutions for Git…