Australian’s have lost 36% of wealth

Written by admin on June 27, 2009 – 6:25 pm

AUSTRALIAN households have lost an extraordinary 36 per cent of their financial wealth since the economic crisis began.

Estimates from the Australian Bureau of Statistics put combined household wealth at just short of $787 billion at the end of March, down from a peak of $1246 billion in September 2007.

The total includes household wealth held in cash, bank deposits, bonds and shares, but net of borrowing. Significantly it excludes wealth held in the form of superannuation and real estate, and both of these have also dived since the crisis began.

» We’ve lost 36% of wealth – The Sydney Morning Herald, 27th June 2009.

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The Ascent of Money: Safe as Houses

Written by admin on June 26, 2009 – 8:14 am

The ABC has been airing a six part series titled “The Ascent of Money”. This series is presented by Professor Niall Ferguson and follows the evolution of Money.

Last night’s episode was called “Safe as Houses” and is worth a watch.

Posted in Australian Housing | 1 Comment »

Worse to come for Australian economy, says Harry Dent

Written by admin on June 20, 2009 – 6:47 pm

AUSTRALIA’S sharemarket will halve in value, house prices will slump as much as 40 per cent and unemployment will climb to 10 per cent.

That’s the bold prediction from economic forecaster Harry Dent, who says a bigger crash is ahead for the global economy within the next two years.

» Worse to come for Australian economy, says Harry Dent – The Courier Mail, June 20th 2009

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Boost : From zero to bubble in eight short months

Written by admin on June 14, 2009 – 3:22 pm

Earlier this year, there was a lot of speculation and warning that the First Home Owner’s Boost would turn the First Home Buyers segment of the market into a subprime bubble. Data from the Australian Bureau of Statistics is now coming out which will confirm these fears.

On Wednesday, the ABS released Housing Finance Commitments for April 2009. It shows First Home Buyers now make up 28 per cent of dwellings financed, the largest slice since the ABS started collecting data on this in 1991. As you can see from the graph below, after the Boost was announced in October 2008, First Home buyers have come out in force. Once they represented about 17% of dwellings financed, today it’s more like 28%.

With all this extra competition to get the grant before it expires and at any cost, the size of First Home Buyers loans have shot though the roof exceeding figures not seen since the 2003 housing boom. Between July 2005 and the start of 2008, First Home Buyer loan commitments have been increasing by around 5% a year or in line with inflation.

By July 2008 any rises in FHB loans had grounded to a halt with the average size of a FHB loan that month being $246,400, $1,400 less than a year prior where the average loan was $247,800.

With the housing market in dire straights and on the verge of a long and well overdue correction, the Australian Government announced the First Home Buyers Boost in October 2008. Almost immediately the market went into overdrive and within the FHB segment of the market, has exceeded the unsustainable bubble of 2003.

Using the Prime Minister’s words, the scary part is “That all good things must come to and end.” Not only do First Home Owners have to worry about the scheme coming to an abrupt end, they are also faced with rising interest rates, rising unemployment and the real possibility they paid far too much all to get an extra $7,000 from the government.

» 5609.0 – Housing Finance, Australia, Apr 2009 – The Australian Bureau of Statistics, 14th June 2009.

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