Skip to main content

Canadian real estate -- When will the other shoe drop

Until now Canada and Australia have been the great outliers in the real estate world.  Both saw large increase int he value of their real estate mainly because both economies were more protected by the nature of the make-up of their GDP, both are huge exporters of natural resources.

Now it seems that Australia's real estate tide is turning, although these are early signals, and the nature of the Australian real estate market may make it more prone to short sharp shocks.  it remains that in Sydney were wages are similar to those of Canadians (better weather but more flies) property prices have become stratospheric.  In Mosman (the posh neighborhood across the bay from Sydney opear house) house prices are usually in the $3/4 million for anything detached.  Also in Australia all properties are sold at auction, so on the day all those interested in buying show up and the house is sold (must be hard on the sellers in a falling market).  An article in the WSJ seems to say that in many markets the tide is turning.

This could be a blip, but it remains that house prices in Australia are very expensive  using almost any start point Australia is in the stratosphere (1988, 1993 or 2000) all show that Australian prices are up 525%, 340% and 250%, where as the data for Canada is 170%, 155% and 155%.  Its worth nothing that only in the last decade has house prices increased more than the U.S. using 1988 and 1993 Canadian house price has risen by less than in the U.S.

If Australia, which is completely attuned to the Chinese market (more so than Canada which is driven by the US demand), then things are beginning to deteriorate for the raw material exporters.


Comments

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b) ground beef requires process

21st century milk parlour

When we first looked at building our farm in 2018, we made a few money-saving decisions, the most important is that we purchased our milk herd from a retiring farmer and we also purchased his milking parlour equipment.  It was the right decision at the time.  The equipment dates from around 2004/05 and was perfectly serviceable, our installers replaced some tubing but otherwise, the milking parlour was in good shape.  It is a mature technology. Now, we are building a brand new milk parlour because our milking cows are moving from the old farm to the new farm.  So we are looking at brand new equipment this time because, after 20 years of daily service, the old cattle parlour's systems need to be replaced.  Fear not it will not be destroyed instead good chunks will end up on Facebook's marketplace and be sold to other farmers for spare parts or expansion of their current systems. All our cattle are chipped, nothing unusual there, we have sensors throughout the farm, and our milki

So we sold surplus electricity one time last summer...(Update)

I guess that we will be buying an additional tank for our methane after all.   Over the past few months, we've had several electricity utilities/distributors which operate in our region come to the farm to "inspect our power plant facilities, to ensure they conform to their requirements".  This is entirely my fault.  Last summer we were accumulating too much methane for our tankage capacity, and so instead of selling the excess gas, that would have cost us some money, we (and I mean me) decided to produce excess electricity and sell it to the grid.  Because of all the rules and regulations, we had to specify our overall capacity and timing for the sale of electricity (our capacity is almost 200 Kw) which is a lot but more importantly, it's available 24/7, because it's gas powered.  It should be noted that the two generators are large because we burn methane and smaller generators are difficult to adapt to burn unconventional gas, plus they are advanced and can &qu