It’s pooey Points of Interest – Spring 2013

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Go directly to Jail, do not pass Go.

This article originally published in The Northern Daily Leader on 14 September 2013.

Before the advent of iPads, Playstations, X-Boxes and the myriad of other electronic entertainment devices, board games were the mainstay of family entertainment. Every household had a cupboard filled with classic games like Risk, Monopoly, Squatter, The Game of Life, and Scrabble. Dog-eared and worn, the games would be dragged out during school holidays and on weekends, where the family could spend some quality time together testing their vocabulary or military leadership skills. My personal favourite was Monopoly. I think it was the sheer amount of money that came in the box; all those neat little $100 notes. When you were only ten or eleven years old, it seemed like it was more money than you could ever imagine and I always fancied that surely somewhere there was a toy shop which would accept Monopoly money.

With only an elder sister, my list of potential Monopoly opponents was short and it usually took some convincing to get her to play a game. Usually the game would end acrimoniously after just an hour or so when I would start complaining that she wasn’t taking it seriously enough. It always seemed to happen just as I was building my latest hotel on Park Lane and wondering what to do with my four train stations. I guess her attitude wasn’t too surprising – at an age where boys, clothes and jewellery were just becoming interesting, why would she want to spend five hours playing a board game with her younger brother?

I started thinking about Monopoly after reading that Sydney recorded a record auction clearance rate of 87% over the election weekend. While the property bull market is probably not yet fully underway, there’s no doubt that record low interest rates are starting to have a major impact on property prices, particularly in Sydney and some of the other major cities. The difference between Monopoly and real life however, is that it’s not possible to borrow in Monopoly. There’s no leverage; no 100% loan-to-value ratio home loans; no property spruikers telling you that a $500,000 mortgage is no problem on a $50,000 salary. Many people attending weekend auctions in Sydney and the rest of the country are basing their repayment calculations on unsustainably low interest and mortgage repayment rates. At some point interest rates will rise, and though we aren’t going back to 1980’s-style rates of 20%+, borrowers will be feeling the pain long before then. In NSW the average home loan is now just under $350,000, an increase of nearly $150,000 in ten years. When interest rates rise, the current housing infatuation may well end like my past games of Monopoly with Lauren; in a flurry of bankruptcies, tears and recriminations.