Housing bubble yet to burst, but we are next says Demographia

Written by admin on January 25, 2009 – 10:59 pm

A study by Demographia has shown Australia has the most cities with “severely unaffordable” housing. The Sunshine Coast ranked the worst for affordability of 265 markets surveyed, followed by Honolulu, the Gold Coast, Vancouver and Sydney. Melbourne and Adelaide were equal 12th place and was found to be less affordable than New York and London.

The report showed affordability in Australia was worsening relative to other countries such as Britain, Ireland, the US and NZ after crashes in their property market. This has lead to predictions by Demographia that the Australian bubble is yet to pop :

The public policy group Demographia, which conducted the study, said affordability in Australia was worsening relative to Britain, Ireland and New Zealand, where prices had recently collapsed.

Australia would be next, it said. “Sooner or later, the inherent instability that characterises virtually all bubbles will lead to house price declines in Australia.”

Meanwhile, the Herald Sun reported yesterday that house prices in Melbourne has fallen 10 percent late last year while repossessions shot upwards. There were 1682 repossessions last year, and increase of 22 percent over the last year.

On the 19th of this month, the Australian reported house prices in Perth fell 4 percent in the December quarter, with a yearly decline of 11 per cent.

With double digit falls being reported in many states and as there are lags in collecting and reporting prices, it’s quite possible Demographia comments about the bubble yet to burst is three to six months too late. Demographia’s report is based on the September ’08 quarter which is increasingly looking like the top of the bubble.

The ABS is due to release December ’08s House Price Indices at 11am on 2nd February (Next Monday). The index last reported a 1.8% fall in house prices across the country between June to September and no doubt all eyes will be glued on what it has to say.

» Housing ‘severely unaffordable’ – The Sydney Morning Herald, January 26th 2009
» Housing market struggles in tough conditions – The Herald Sun, January 25th 2009


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No one to save us now

Written by admin on January 24, 2009 – 9:54 am


As the U.S. economy took a dive, experts said "no fear" – Australia was decoupled from the US and booming China would continue to power our economy. Yet, as consumers in the world economy cut back on purchasing goods, now China’s growth is falling at alarming rates. What now? Who is left to save Australia? Australia’s other two top export markets, Japan & South Korea are even worse. Korean’s GDP has fallen 5.4% in December and Japan’s exports have fallen 35% in the year to December.

The Sydney Morning Herald reports :

CHINA may never again power the Australian economy like it has over the past five years, posing huge risks to the local economy, ripping billions from exports, and almost certainly driving the budget into deficit.

In figures significantly worse than the Rudd Government was anticipating, China’s National Bureau of Statistics yesterday said annual growth almost halved from 13 per cent in 2007 to 6.8 per cent in the year to December – below the arbitrary 8 per cent threshold that Chinese leaders say creates risks of social instability.

» The great stall of China – The Sydney Morning Herald, 23rd January 2009.
» China’s economic growth slows sharply: official, The Australian, 22nd January 2009.


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We are experiencing the “sharpest deceleration Australia’s economy has ever seen”

Written by admin on January 19, 2009 – 4:46 am

While many still argue if Australia will fall into recession, the inevitable has happened. NSW is already in recession, and the rest of Australia is not far off.

In a forecast to be published today from Access Economics, it predicts Australia will be in a technical recession by the end of March.

Chris Richardson, Director at Access Economics and heading up the Macroeconomic Group said “This is not just a recession. It will be the sharpest deceleration Australia’s economy has ever seen”

» NSW set to recover ahead of the pack – The Sydney Morning Herald, 19th January 2009.


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Property market in free fall

Written by admin on January 19, 2009 – 4:34 am

THE West Australian property market is being decimated following the evaporation of the resources boom, with values of $1 million-plus properties plummeting 20 per cent and the equivalent of more than two years’ supply of homes flooding real estate agencies.

In Geraldton, rents have slumped 8 per cent and in the state’s northwest fibro shacks that had been fetching rents of $1000 a week are sitting vacant as formerly high-paid mining executives face widespread retrenchment.

Read the complete article at :
» Property market in free fall – The Australian, 19th January 2009.


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Rudd has housing on life support, but for how long?

Written by admin on January 15, 2009 – 8:15 pm

Rudd’s $10.4 billion dollar economic stimulus plan seems to have done the trick. It has stabilised the patient.

ABS housing finance figures released today show the value of dwelling commitments for owner occupier housing increased 1.4%. This positive result is driven by a 17.8% increase of First Home buyers entering the market after the doubling of the FHOG.

The grant, not available to investors, did little to help the value of dwelling commitments for investor housing. It slid down 6.1% for the month of November.

However with the grant expiring on June 30 this year, the government is now under pressure to throw more money into the wind and extend this.

» Grant stems housing slide as pressure is on to extend first-home buyer scheme – The Australian, 15th January 2008.


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Jobs ads tumble to recession levels: ANZ survey

Written by admin on January 12, 2009 – 7:49 pm

An ANZ survey of jobs advertised in both Print and Internet media has plunged to recessionary levels. Job ads advertised in December fell 9.7%, accelerating from the previous month’s fall of 8.6%. Job ads are now down 29.9% for the year.

» Jobs ads tumble to recession levels: ANZ surveyThe Australian, 12th January 2009


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Bankruptcies hit record high in Australia

Written by admin on January 11, 2009 – 7:50 pm

Insolvency and Trustee Service Australia (ITSA) data today shows bankruptcies have increased 6.03% in the year to December with a total of 6649 cases filed.

Debt agreements are up 37.12 percent over the same period.

» Bankruptcies hit record high in Australia – Sunday Telegraph, 11th January 2009.


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US : Worst year for jobs since ’45

Written by admin on January 10, 2009 – 7:55 pm

December saw a staggering 524,000 jobs shredded as the recession picks up pace in the US. December’s decline brings the year’s total loses to 2.6 million, the worst year since 1945 when World War II ended.

The US unemployment rate now stands at 7.2%, the highest rate since 1993.

» Worst year for jobs since ’45 – CNN Money – 9th January 2009.


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UK : Bank of England cuts rates to the lowest since 1694

Written by admin on January 9, 2009 – 8:04 pm

The Bank of England has today reduced the benchmark interest rate by 0.5% to 1.5%, the lowest rate since the Bank of England was established in 1694.

» BOE Cuts Rate to Lowest Since Bank’s Creation in 1694 – Bloomberg, 8th January 2008.


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$40b lost in six months as Victorian property prices dives

Written by admin on January 7, 2009 – 8:09 pm

Victorian’s are finding out that their property market isn’t as resilient as first thought. House prices have fallen 5% since July bring loses to $40 billion.

The medium house price has fallen from $450,000 in the middle of last year to $427,500.

» $40b lost in six months as Victorian property prices plummet – Herald Sun January 07, 2009


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