The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Sunday, May 29, 2011

How risky is home ownership? Quite risky for the individual owner. Not risky at all if you diversify

We've published extensive empirical analysis on the riskiness of the individual owner-occupied home in the past. This research was the first of its kind to be published on the Australian market. (It is rather ironic that some of the housing nutters out there have ignored this work for so long, since it would at least afford them vastly more informed arguments!) In summary, we found that the empirical volatility of a single family home has historically been around 15-20% pa . This contrasts with the national index volatility of 3-5% pa. You can read a summary of the research that I published here over at Business Spectator ages ago. I actually undertook some preliminary tests that arrived at similar findings in my 2003 report to the Prime Minister's Home Ownership Task Force (refer to the section quantifying the probability of individual home owner loss and the related literature review).