Australian Economy: Do you think the government now has its head out of the sand?
Jan 16th 2009, 2:20 am
#61
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Re: Australian Economy: Do you think the government now has its head out of the sand?
Rio Paints Grim Picture
BTW talking of mining - anybody know where Amazulu is? I'd like to hear his take on the last couple of months from the inside.
BTW talking of mining - anybody know where Amazulu is? I'd like to hear his take on the last couple of months from the inside.
I work for a mining contractor and basically mining engineering work has fallen off a cliff. Things may be different in WA though. People at our office are all sat around waiting for new work to come in.
Interestingly there seem to be a lot of Engineering jobs in NSW at the moment!
Jan 16th 2009, 2:25 am
#62
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Re: Australian Economy: Do you think the government now has its head out of the sand?
I work for a mining contractor and basically mining engineering work has fallen off a cliff. Things may be different in WA though. People at our office are all sat around waiting for new work to come in.
Interestingly there seem to be a lot of Engineering jobs in NSW at the moment!
Interestingly there seem to be a lot of Engineering jobs in NSW at the moment!
Jan 16th 2009, 2:27 am
#63
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Re: Australian Economy: Do you think the government now has its head out of the sand?
Here is the latest article I can find on the Rental Markets around Aus.
http://blogs.domain.com.au/2008/10/g...market_st.html
Basically the conclusion is, if there is a recession in Aus, then rentals will become even scarcer pushing prices up.
We are still sitting on a very low 1.5 pct Vacancy rate in Inner Melbourne.
Conclusion.... 1,000's of houses have to be built.
http://blogs.domain.com.au/2008/10/g...market_st.html
Basically the conclusion is, if there is a recession in Aus, then rentals will become even scarcer pushing prices up.
We are still sitting on a very low 1.5 pct Vacancy rate in Inner Melbourne.
Conclusion.... 1,000's of houses have to be built.
Jan 16th 2009, 2:33 am
#64
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Re: Australian Economy: Do you think the government now has its head out of the sand?
Here is the latest article I can find on the Rental Markets around Aus.
http://blogs.domain.com.au/2008/10/g...market_st.html
Basically the conclusion is, if there is a recession in Aus, then rentals will become even scarcer pushing prices up.
We are still sitting on a very low 1.5 pct Vacancy rate in Inner Melbourne.
Conclusion.... 1,000's of houses have to be built.
http://blogs.domain.com.au/2008/10/g...market_st.html
Basically the conclusion is, if there is a recession in Aus, then rentals will become even scarcer pushing prices up.
We are still sitting on a very low 1.5 pct Vacancy rate in Inner Melbourne.
Conclusion.... 1,000's of houses have to be built.
The other factor is that despite the larger 1st home buyers bonus a lot of youngsters will be reluctant to commit to a mortgage at the moment.
Jan 16th 2009, 3:07 am
#65
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Location: Singleton, NSW
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Re: Australian Economy: Do you think the government now has its head out of the sand?
Here is the latest article I can find on the Rental Markets around Aus.
http://blogs.domain.com.au/2008/10/g...market_st.html
Basically the conclusion is, if there is a recession in Aus, then rentals will become even scarcer pushing prices up.
We are still sitting on a very low 1.5 pct Vacancy rate in Inner Melbourne.
Conclusion.... 1,000's of houses have to be built.
http://blogs.domain.com.au/2008/10/g...market_st.html
Basically the conclusion is, if there is a recession in Aus, then rentals will become even scarcer pushing prices up.
We are still sitting on a very low 1.5 pct Vacancy rate in Inner Melbourne.
Conclusion.... 1,000's of houses have to be built.
On the same note I read somewhere that in Western Sydney there were lots of households that spent around 25% of the household income on transport - petrol, train fares etc. Perhaps the shortage in housing in Mebourne is because people are moving closer to where they work?
I am not sure that rents will rise or house prices will fall. Maybe it depends on the location. I do know that some of the rents in the WA and NT mining towns were ridiculous, sometimes $1000 per week for a very ordinary house. Another thing is that here in Gladstone the houses cost about $400k but the rents are about $300 pw for such a house. The yield on this isn't that good so either rents will rise or house prices will fall. The latter I hope.
Last edited by bjddavies; Jan 16th 2009 at 3:12 am.
Jan 16th 2009, 4:03 am
#66
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Re: Australian Economy: Do you think the government now has its head out of the sand?
No I believe it's due to the huge numbers of overseas migrants who choose Melbourne in which to live. I have seen the figure '1500 a week' bandied about several times: I think that was the net migration figure in the Melbourne metropolitan area for the fiscal year 2007-2008.
Jan 16th 2009, 4:12 am
#67
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Re: Australian Economy: Do you think the government now has its head out of the sand?
No I believe it's due to the huge numbers of overseas migrants who choose Melbourne in which to live. I have seen the figure '1500 a week' bandied about several times: I think that was the net migration figure in the Melbourne metropolitan area for the fiscal year 2007-2008.
Jan 16th 2009, 4:16 am
#68
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Re: Australian Economy: Do you think the government now has its head out of the sand?
Though I realise until I can find a source for the 1500 figure - it might even be on BE - you probably won't agree. If I get a chance I'll see if I can find it.
Jan 16th 2009, 4:31 am
#69
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Re: Australian Economy: Do you think the government now has its head out of the sand?
No I believe it's due to the huge numbers of overseas migrants who choose Melbourne in which to live. I have seen the figure '1500 a week' bandied about several times: I think that was the net migration figure in the Melbourne metropolitan area for the fiscal year 2007-2008.
I suspect that net immigration along with population growth does have an effect on housing since the population of Australia continues to grow. My map on the wall says that the population was 17.5 million in 1995 whereas it is now around 21 million I believe.
Go to Brisbane if you want a good example of a city that has not planned for population growth.
Edit:
See this link Australians 'in denial over rising population'
Last edited by bjddavies; Jan 16th 2009 at 6:22 am.
Jan 16th 2009, 4:52 am
#70
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Re: Australian Economy: Do you think the government now has its head out of the sand?
Immigration Update
2007 - 2008
Without having looked at it in much detail it gives a figure of 51,988 for permanent arrivals in Victoria for 2007-08. That figure does not include:
- departures
- temporary arrivals (eg students and working-holiday makers)
This figure is roughly 1,000 arrivals a week. I presume it's for individual arrivals (ie a family of 4 would count as 4 arrivals) and not primary applicants (in which case a family of 4 with 1 primary applicant would count as 1).
I have no doubt that were I to spend more than 10 minutes wading through a 65 page PDF I would find answers to all those queries above.
The point of this exercise is to show that net inwards immigration plays a role in housing shortages and property prices: whether 1,000 immigrants a week is enough to have an impact is a personal judgement.
Jan 16th 2009, 4:57 am
#71
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Re: Australian Economy: Do you think the government now has its head out of the sand?
Some Debt figures as at 30 June 2007 converted to US$
Public debt
Australia 15.6% of GDP
United Kingdom 43.6% of GDP
United States 60.8% of GDP
Public Debt: This records the cumulative total of all government borrowings less repayments that are denominated in a country's home currency. Public debt should not be confused with external debt
National Debt - External
Australia $36,078 per head of population
United States $40,319 per head of population
United Kingdom $171,469 per head of population
National Debt - External: This gives the total public and private debt owed to nonresidents repayable in foreign currency, goods, or services
Domestic Credit
United States $46,573 per head of population
Australia $62,454 per head of population
United Kingdom $86,604 per head of population
Domestic Credit: This is the total quantity of credit, denominated in the domestic currency, provided by banks to nonbanking institutions. The national currency units have been converted to US dollars at the closing exchange rate on the date of the information.
Anyone know of any other "debt" figures, and where I can locate them ?
Public debt
Australia 15.6% of GDP
United Kingdom 43.6% of GDP
United States 60.8% of GDP
Public Debt: This records the cumulative total of all government borrowings less repayments that are denominated in a country's home currency. Public debt should not be confused with external debt
National Debt - External
Australia $36,078 per head of population
United States $40,319 per head of population
United Kingdom $171,469 per head of population
National Debt - External: This gives the total public and private debt owed to nonresidents repayable in foreign currency, goods, or services
Domestic Credit
United States $46,573 per head of population
Australia $62,454 per head of population
United Kingdom $86,604 per head of population
Domestic Credit: This is the total quantity of credit, denominated in the domestic currency, provided by banks to nonbanking institutions. The national currency units have been converted to US dollars at the closing exchange rate on the date of the information.
Anyone know of any other "debt" figures, and where I can locate them ?
One of the most important reasons for the long-term overvaluation of property in Oz is that, lacking much in the way of "council housing" (for want of a better term), governments have given such juicy tax breaks to people buying second, third etc homes to rent out that a much larger percentage of the general public here have several properties. All of which are hugely mortgaged. The tax breaks have meant that almost anyone could buy property that didn't generate sufficient to pay its way in the normal course of events. Now that prices are falling, quite a few have mortgages higher than the resale value and, despite much lower interest rates are in serious trouble if they are forced to sell, for example if they lose their jobs, have to move etc.
No government will have the cojones to put an end to the distortions in the housing/tax situation, so IMO things could get very bad very quickly.
(Except, of course, Mr Rudd tells us that Australia won't be affected. oh, sorry - that was a month ago: now we are going to be hit by the foreign credit crisis....)
Jan 16th 2009, 5:02 am
#72
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Re: Australian Economy: Do you think the government now has its head out of the sand?
Rio Paints Grim Picture
BTW talking of mining - anybody know where Amazulu is? I'd like to hear his take on the last couple of months from the inside.
BTW talking of mining - anybody know where Amazulu is? I'd like to hear his take on the last couple of months from the inside.
Jan 16th 2009, 5:05 am
#73
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Re: Australian Economy: Do you think the government now has its head out of the sand?
It's looking more and more likely that the "boom" has gone "bang"?
Jan 16th 2009, 9:24 am
#74
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Re: Australian Economy: Do you think the government now has its head out of the sand?
I don't think it has even scratched the surface yet.
If this is going to be a prolonged global recession then I reckon even those of you in the state sector will suffer in due course. WA has a history of being at the very extremes of every boom and bust and there is no reason to suspect this one will be any different.
Let’s try and walk through what will happen:
For now it is mostly just people being worried. Your Australian mentality of she’ll be right means this doesn’t hurt as much as the UK, say. But there will still be belt tightening.
The next thing is that resource companies are starting to close down operations or cancel expansions. The news on TV and the press is not so bad, these companies plan for boom and bust so employ a very high proportion of contractors for just this reason. But for every one employee who loses their job and makes the news another 5 contractors / consultants have no work – these are the guys you refer to who have been gloating I imagine.
Many people won’t move house, buy a new car or a HD TV etc when they get their bonus cheque – they will stick it in the bank for a rainy day. So estate agents, used car salesmen and sales reps will not earn so much (I don’t imagine there will be much sympathy for any of them.)
But those guys decide to rent a DVD rather than go to the cinema; get a takeaway rather than go for a meal so there are a few more businesses not earning what they did.
In particular, the cashed up miners that have been driving the price rises are reducing and this has a relatively strong impact on the downturn.
As it gets worse these service businesses lay off staff or even close down completely.
There is now less and less money being passed over the counter as everyone knows someone who has lost their jobs and they worry for themselves even more.
The councils / governments are somewhat protected from all this. People still have to pay their rates. But a lot of their income comes from payroll taxes, business rates, sponsorships and all of this starts to reduce. Perhaps not as severely as the private sector but noticeable all the same.
The public sector can’t raise revenue from other sources so it has to cut expenditure. It will cancel some public works programmes (and put more people out of work accelerating the decline). It will also look to make economies in its operating costs. It might just be pay rises are restrained or even abolished but there will be some job losses too.
As people struggle to make ends meet there will be political pressure bought on governments to keep a lid on rates and so more cuts are made.
In the meantime those engineers and the like that piled into the state to gorge on the boom start leaving to chase work in other states / countries. They may take a loss on their investment properties / home but again, maybe, no sympathy.
But we are now left with empty houses running the suburbs down. Crime is increasing as desperate people take desperate measures. State government diverts funds away from schools to pay for policemen (for example).
With less house occupation comes less rates into the public coffers and the governments are forced into another round of cost cutting and job losses.
Schools will close and amalgamate as there are not enough kids to justify them and some teachers will lose their jobs.
Repeat that cycle ad nauseum until things are dire and people believe they just can’t get any worse. Gradually they notice it is no worse than a while ago and a little confidence comes back. Over the next few months and years confidence begins to grow and feeds off itself.
No doubt greed will lead us into another boom, lessons will not be learnt and there will be another bust in due course.
The only question is how deep and how long this slump is. I just hope that I head into retirement at a point where we are mid-boom so my pension is healthy, unlike my parents who are retiring this year.
If this is going to be a prolonged global recession then I reckon even those of you in the state sector will suffer in due course. WA has a history of being at the very extremes of every boom and bust and there is no reason to suspect this one will be any different.
Let’s try and walk through what will happen:
For now it is mostly just people being worried. Your Australian mentality of she’ll be right means this doesn’t hurt as much as the UK, say. But there will still be belt tightening.
The next thing is that resource companies are starting to close down operations or cancel expansions. The news on TV and the press is not so bad, these companies plan for boom and bust so employ a very high proportion of contractors for just this reason. But for every one employee who loses their job and makes the news another 5 contractors / consultants have no work – these are the guys you refer to who have been gloating I imagine.
Many people won’t move house, buy a new car or a HD TV etc when they get their bonus cheque – they will stick it in the bank for a rainy day. So estate agents, used car salesmen and sales reps will not earn so much (I don’t imagine there will be much sympathy for any of them.)
But those guys decide to rent a DVD rather than go to the cinema; get a takeaway rather than go for a meal so there are a few more businesses not earning what they did.
In particular, the cashed up miners that have been driving the price rises are reducing and this has a relatively strong impact on the downturn.
As it gets worse these service businesses lay off staff or even close down completely.
There is now less and less money being passed over the counter as everyone knows someone who has lost their jobs and they worry for themselves even more.
The councils / governments are somewhat protected from all this. People still have to pay their rates. But a lot of their income comes from payroll taxes, business rates, sponsorships and all of this starts to reduce. Perhaps not as severely as the private sector but noticeable all the same.
The public sector can’t raise revenue from other sources so it has to cut expenditure. It will cancel some public works programmes (and put more people out of work accelerating the decline). It will also look to make economies in its operating costs. It might just be pay rises are restrained or even abolished but there will be some job losses too.
As people struggle to make ends meet there will be political pressure bought on governments to keep a lid on rates and so more cuts are made.
In the meantime those engineers and the like that piled into the state to gorge on the boom start leaving to chase work in other states / countries. They may take a loss on their investment properties / home but again, maybe, no sympathy.
But we are now left with empty houses running the suburbs down. Crime is increasing as desperate people take desperate measures. State government diverts funds away from schools to pay for policemen (for example).
With less house occupation comes less rates into the public coffers and the governments are forced into another round of cost cutting and job losses.
Schools will close and amalgamate as there are not enough kids to justify them and some teachers will lose their jobs.
Repeat that cycle ad nauseum until things are dire and people believe they just can’t get any worse. Gradually they notice it is no worse than a while ago and a little confidence comes back. Over the next few months and years confidence begins to grow and feeds off itself.
No doubt greed will lead us into another boom, lessons will not be learnt and there will be another bust in due course.
The only question is how deep and how long this slump is. I just hope that I head into retirement at a point where we are mid-boom so my pension is healthy, unlike my parents who are retiring this year.
Boom bust is the normal cycle,I don't think it will ever change,fear and greed are the two strongest emotions.As you've seen on the board when prices are rising everybody rushes in and keeps buying,prices are never going to stop rising.Greed is in total control,all they see is $$$.Buy gold it hit, $1000 last week,rent is dead money etc.Negative gearing is great,tax back.
When prices fall they never buy,look how much it has fallen.When prices rise they buy,look how much it has gone up.The money tree is planted in a recession when prices are cheap and interest rates are low,it is harvested when prices are high and rates rise,the old economic clock..
While unemployment is still low and nowhere near the levels of 74-77 ,82-84 and 90-92 the fear is the killer.An unemployment rate of 12% was a disaster for those 120 people per thousand that had no job.However it still means that980 per thousand were still working.The fear means that probably 50% of those people will be worried sick that it might be their turn next week.So money is hoarded.
One day the fear will end and normality will return,money will begin to be spent and the greed cycle starts again,fear is banished.Companies will try to keep turning over if it means they can pay bills and payroll,some bargains will tempt people back.
We'll have a bit of peace for a while from the people who complain non stop how any company making a profit must be ripping people off,profits produce employment,losses produce closures and unemployment.
When things get better they will be back,5 mins is usually enough time for people to forget each cycle.Tulip booms will always exist whether it is tulips,internet stocks,or resources.The name changes,the end product is still the same.
For people like me it will be the last cycle I will work through,for the young ones it should be a learning experience.Every decade of my life has produced the same boom/bust.
While the fear and greed are destructive the worst emotion is the jealousy,fortunately the jealous ones are usually the people that never get anywhere.
Jan 16th 2009, 9:47 am
#75
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Re: Australian Economy: Do you think the government now has its head out of the sand?
You sound like the type of person who deserves to lose a lot of money with this last statement.
Many people - certainly here in Perth - couldn't even get on the property ladder because of speculators and people who drove the market for their own greed.
Owning one house to put a roof over the family hasn't been possible for many, many people.
But I suppose that they're just jealous and will never get anywhere....?