THE DISTILLERY: Property chills

Most of the papers noticed that the housing sector is cooling with new home sales down last month. But August building approvals fell (reported on Wednesday), prices are down again, especially in hot Melbourne, and housing credit is again easing. So where are the bubbleistas this morning? And Fitch Ratings and its stress tests, and those foreign experts who know a bubble when they see it, but mostly missed the biggest of all in the US, under their balance sheets?

The Australian Financial Review wrote this morning: "The housing market is cooling, allaying fears that households are taking on too much debt and challenging claims of a dangerous bubble." And the Sydney Morning Herald, down among the tabloids, breathlessly reported under the headline "Pressure to freeze rates": "A three-month slump in house prices and growing signs that higher interest rates are dampening parts of the economy are putting pressure on the Reserve Bank to hold its fire next week. After soaring for 17 months in succession since early last year, average Australian house prices posted their third consecutive monthly fall in August." In Melbourne The Age's Tim Colebatch was just as declamatory: "Australia housing recovery has vanished. Dwelling approvals plunged again in August to their lowest level in a year, throwing serious doubt on the prospects of another rate rise soon. With the federal government's stimulus programs coming to an end, the banks turning away builders, and six rate rises in the past year deterring buyers, seasonally adjusted housing approvals fell 4.7 per cent in August to 13,049. In just five months, approvals have crashed by 24 per cent, after hitting a high of 16,835 in March." Oddly, The Australian didn't see this 'shock, horror' story and the yarn didn't get much play, at least on its website.

But on the News.com website, the souffl maker was out: "The big banks are preparing to defy Reserve Bank of Australia and government warnings that they have no justification for lifting their mortgage rates by more than the official cash rate. The RBA yesterday dismissed complaints by banks that their margins were being eroded by the increasing cost of raising funds on world markets. And Wayne Swan launched a ferocious attack on the integrity of the banks. The expected clash with the banks comes as The Daily Telegraph reported that weaker than expected building approvals figures could result in the Reserve Bank postponing a rise in official interest rates until November." Just the sort of stories to ruin a real estate agents morning ahead of a big Saturday of selling.

At the Herald Sun in Melbourne, there was more of the same: "The Reserve Bank's looming interest rate decision is on a knife-edge after the publication of a suite of figures calling into question the true pace of Australia's economic growth. Analysts say lacklustre data on building approvals, business credit, household savings and house prices could compel the Reserve Bank board to become trigger-shy." Melbourne saw the biggest rise in house prices, now it's enjoying the biggest fall. Ad revenues at the paper might start hurting soon, and at the rival Age.

It's been the best quarter for a year for stockmarkets, the second best for the Australian dollar ever, oil however has gone nowhere, while copper has surged. But gold has been the star, 11 new record prices in September alone. The boom is back, long live the boom! Well, not quite yet, turnovers on major markets are lower now that earlier this year or a year ago as small investors refuse to engage. Emerging markets attracted more international money than did developed country markets last quarter. The Australian Financial Review cautions us this morning that while "Australian shares have come out of their best quarter in a year but market watchers warn investors not to get too carried away as they head into what has traditionally been the market's worst month."

Fairfax's Liz Knight doesn't think BHP Billiton will win its battle for PotashCorp: "If I were a betting person I would offer long odds on BHP Billiton winning its $40 billion takeover bid for PotashCorp of Canada. Many forces are running against a positive outcome for BHP, including the Potash shareholder rights plan, regulatory approvals and Canadian politics. In theory some of these could be overcome if BHP put enough money on the table. Success or failure in most takeover deals comes down to money - but in this case even money isn't enough to ensure success." That might be the case Liz, but Sinochem of China can't find anyone to bid with it and Canadian PM, Stephen Harper has just appointed a new chief of staff, Nigel Wright, who was involved in the bid for Qantas for Onex of Canada. He's seen as being pro-business and bids.

Fairfax Insider, David Symons warns another toll road disaster is coming: "The toll road sector looks set to claim a third victim, with RiverCity Motorway Group facing up to a grim reality, presenting its audited financial report ''on the basis that an orderly winding-up of the group could occur sometime after September 2011''. Equity investors in Sydney's privately held Cross City and Lane Cove Tunnels have already seen their investments wiped out." Another failure from supposed experts.

The AFR's Chanticleer ignored those triumphs of private enterprise to again mount the stumbling nag of privatisation and urge the sale of Medibank private: "Finance minister Penny Wong's undoubted negotiating skills ought to be turned to convincing her colleagues of the commercial sense in selling Medibank Private, which based on yesterday's profit result, is worth about $3.5 billion." Why now? Times are tough in the buyout business, no one wants to sell, fees are falling, trading volumes and revenues are falling. Jobs are at stake. Watch the QR National float from Queensland and see how that goes first. The sale of Medibank seemed to be rejected by the voters on August 21, but Chanticleer knows best.

Fairfax's Matt O'Sullivan did some number crunching on the bounteous glories of being Wal King: "Department Leighton Holdings chief Wal King's pay in the past seven years has almost reached $90 million. Mr King has maintained his place among Australia's highest-paid executives after pocketing a total salary of $14.7 million for the year to June 30. The total salary for Mr King, who is on Leighton's remuneration committee, is up 17 per cent on the previous year and includes a short-term cash bonus of $7.6 million. The great bulk of his salary in the past seven years has been cash. Mr King has the potential to get up to $30 million when he leaves Leighton at the end of the year, including a $12.6 million termination payment. He will be retained as a consultant." Oh great glorious god of excess... and on the remuneration committee, how lucky is Wal?

And John Durie in The Australian added his piece: "Leighton is an Australian-listed gem thanks to a superb management team, led by Wal King under chairman David Mortimer's watchful eye. But surely the latter will not make a mockery of the regime change he has engineered by paying King any sort of consultancy fee or non-compete clause. If you exclude 52 per cent-owner Hochtief, shareholders have voted down the board remuneration report in two of the last three years, yet Mortimer is planning an egregious payment of $5 million to King for satisfactory succession planning."

The Australian's Tim Boreham says the Aussie dollar might have made Foster's a bit more safer: "Investors waiting on an offer for either the beer or wine divisions at Foster's need to drink from the cup of patience. Potential offshore bidders now will be 18 per cent less inclined to do so since Fosters management announced demerger plans on May 26. The reason, of course, is the Australian dollar, which has appreciated from 82 US cents at the time of the announcement to a new high of 97 US cents overnight – it not only makes an offer more expensive but also depresses the value of the US-oriented wine business." This a nice point missed by other jotters.