If the recession bites do you think housing will plummet?
#197
Re: If the recession bites do you think housing will plummet?
Guess we will just have to wait and see.
#198
Banned
Joined: Feb 2008
Posts: 421
Re: If the recession bites do you think housing will plummet?
Australian banks do not have the exposure to the US CDO that have affected others, especially the European investment banks. Australian banks are currently in profit and predicting profits. There are increased provisions for bad debts.
The danger for the Australian banks is that the Australian economy deteriorates worse than expected and the bad debts become more significant. They also have the government guarantee to fall back on which worries me as it may encourage irresponsible lending.
I have heard a number of reasons why the banks here have not been hit as hard. IMO the one that has had the biggest affect is that in the early nineties Westpac nearly went the way of Northern Rock. Supervision by APRA was significantly tightened. A few years ago non bank lenders were gaining significant ground on the banks. The banks responded by relaxing their lending criteria. APRA pulled them back in line and we all know what has happened to RAMS, Wizard etc.
You also identify investment firms. Some of these are adept in the Alan Bond school of finance. Raptis, City Pacific etc just seem to burn investors cash. They are not banks.
The biggest two failures in finance have been Allco and B&B. The former went into administration and the latter is now owned by the banks. May the clearup carry on.
The danger for the Australian banks is that the Australian economy deteriorates worse than expected and the bad debts become more significant. They also have the government guarantee to fall back on which worries me as it may encourage irresponsible lending.
I have heard a number of reasons why the banks here have not been hit as hard. IMO the one that has had the biggest affect is that in the early nineties Westpac nearly went the way of Northern Rock. Supervision by APRA was significantly tightened. A few years ago non bank lenders were gaining significant ground on the banks. The banks responded by relaxing their lending criteria. APRA pulled them back in line and we all know what has happened to RAMS, Wizard etc.
You also identify investment firms. Some of these are adept in the Alan Bond school of finance. Raptis, City Pacific etc just seem to burn investors cash. They are not banks.
The biggest two failures in finance have been Allco and B&B. The former went into administration and the latter is now owned by the banks. May the clearup carry on.
Australia's second largest investment bank, Babcock & Brown, has gone into administration after it was unable to deal with its massive debt levels.
The former private equity powerhouse, had struggled for more than a year.
Babcock's downfall was blamed on taking on too much debt - and then being unable to cope in the credit crunch.
At its peak, shares were worth 37 Australian dollars (£17.40; US$24.20) but when suspended about three months ago, were worth just 32.5 cents.
Uncertainty
Efforts to avoid administration failed when a group of shareholders rejected a proposed debt restructuring, with Deloitte being appointed as administrators.
Like with Chapter 11 bankruptcy laws in the US, firms entering voluntary administration in Australia can attempt to trade out of financial difficulties.
But administrator David Lombe told the Australian Broadcasting Corporation that it was too early to say whether Babcock could avoid collapse.
While administrators will run the company on behalf of creditors, Babcock said that it would focus on "ensuring that the value of assets and business platforms is preserved during this process and all assets and businesses continue to be managed appropriately".
Its satellite investment funds, Babcock & Brown Infrastructure - which owns UK port firm PD Ports - said it was unaffected by the administration.
Babcock had been hailed a success, likened to a mini-version of Australia's most dominant investment bank Macquarie.
Last November, Macquarie announced a sharp fall in profits but said it did not need to raise cash.
OOOOPPPPPSSSS
#199
Guest
Posts: n/a
Re: If the recession bites do you think housing will plummet?
http://news.bbc.co.uk/1/hi/business/7941179.stm
Australia's second largest investment bank, Babcock & Brown, has gone into administration after it was unable to deal with its massive debt levels.
Australia's second largest investment bank, Babcock & Brown, has gone into administration after it was unable to deal with its massive debt levels.
They now have almost $10 billion of debt, although their banking syndicate is dominated by European institutions, and Australia's four major banks have an exposure estimated to total less than 10% of the total debt.
#200
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Joined: Mar 2006
Location: Jeddah, Saudi Arabia
Posts: 1,717
Re: If the recession bites do you think housing will plummet?
Your not trying to Compare Melbourne to Manchester or anywhere else in the UK. If Melbourne were suddenly to appear as a Geographical location in the UK. it would be the 2nd biggest city in the country.
Or twice as big in population as the UK's second biggest city....Birmingham.
http://en.wikipedia.org/wiki/Birmingham
The thing that makes London stand out is the 40,000 pounds sterling average wage.
Or twice as big in population as the UK's second biggest city....Birmingham.
http://en.wikipedia.org/wiki/Birmingham
The thing that makes London stand out is the 40,000 pounds sterling average wage.
There is one big difference, When people quote the population of Melbourne they include everyone from Frankston in the south to Eltham in the north and Ferntree Gully in the east to Werribee in the west, this is a huge geographical area, if Birmingham did the same it would have a similar population, Melbournes true population is prob no higher than 1 million.
#201
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
They took the Macquarie Banking model to the extreme and got hammered. Allco had the same fate recently. Not sure if they were classified as banks.
Compared to Mac and overseas investment banks they are minnows however the oversea banks are major players in the local scene.
The end result is a lot of redundancies in those industries in Sydney and Melbourne which is why higher end housing has been hit.
As well as the loss of high earning jobs the local impact is the loss of an institution that funded local business and infrastructure although they have been inert for a long time.
The big question is what will happen in Mac Bank? I doubt they will suffer the same fate but they do have a high debt model.
Compared to Mac and overseas investment banks they are minnows however the oversea banks are major players in the local scene.
The end result is a lot of redundancies in those industries in Sydney and Melbourne which is why higher end housing has been hit.
As well as the loss of high earning jobs the local impact is the loss of an institution that funded local business and infrastructure although they have been inert for a long time.
The big question is what will happen in Mac Bank? I doubt they will suffer the same fate but they do have a high debt model.
They were in trouble back in June last year, when their shares dropped almost 30%. It seems they weren't able to trade out of it.
They now have almost $10 billion of debt, although their banking syndicate is dominated by European institutions, and Australia's four major banks have an exposure estimated to total less than 10% of the total debt.
They now have almost $10 billion of debt, although their banking syndicate is dominated by European institutions, and Australia's four major banks have an exposure estimated to total less than 10% of the total debt.
#202
Re: If the recession bites do you think housing will plummet?
Back to te eoriginal thread...we went house hunting yesterday at perhaps the lower end of the 'house' market (i.e. rather than unit or town house) and we could not believe the level of viewing. At one place there was 66 groups!
#203
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
The ramifications of letting the budget get out of hand are far more serious. John Howard had it easy with rising revenues from resources. The mark of good government is how they make cuts and adjust taxes in tough times. I think it depends on how much the budget has been hit already.
Policy should be targeted at encouraging economic activity in the housing sector and not boosting prices one little bit more. IMO the only way is to cut a deal with the states on stamp duty and infrastrucure taxes. That and land release policy need review.
#204
Re: If the recession bites do you think housing will plummet?
My thoughts were also to raise GST to 15% or higher on:
Cigs (100%) sorry smokers but its for your own good
Alcohol (wine 15% drinks that encourage binge drinking 20%)
Gambling (perhaps 20%)
Fast food (anything served too eat with calorie and fat combination over a specified healthy range 20%)
#205
Forum Regular
Joined: Mar 2006
Location: Sunshine Coast
Posts: 136
Re: If the recession bites do you think housing will plummet?
At the end of the day the one trick pony that was the Australian Economy under the Howard years (Natural Resources) is starting to unravel whilst the many tax breaks that Horward introduced for small business owners and Property Investors inparticular are now totally unsustainable without these income streams propping them up.
Problem is, how does Rudd say all this without losing his Blairite all things to all men persona.
Australia needs some hard truths - mainly that people have had to very good due to both State and Federal returns from the mining boom. The choice is to raise taxes to a level that sustains Australia without mining revenues or lower expectations of public services and opportunity. You can't afford to have both in the current economic climate.
Problem is, how does Rudd say all this without losing his Blairite all things to all men persona.
Australia needs some hard truths - mainly that people have had to very good due to both State and Federal returns from the mining boom. The choice is to raise taxes to a level that sustains Australia without mining revenues or lower expectations of public services and opportunity. You can't afford to have both in the current economic climate.
#206
Re: If the recession bites do you think housing will plummet?
Anybody who believes Oz will not be very severely hit by the recession is living in a fools paradise.
The economics are simple - Oz is a small country that relies heavily on exporting commodities. Oz is not self-sufficient.
The buyers - China especially - just aren't buying, or if they are it is at a much lower price. So, Oz income will drop severely -large numbers of people will continue to be laid off, house prices will plummet along with interest rates.
The government may like to spin it differently but it's going to get a lot grimmer before it gets better. And that means it will stay grim until the US starts to pick-up.
The economics are simple - Oz is a small country that relies heavily on exporting commodities. Oz is not self-sufficient.
The buyers - China especially - just aren't buying, or if they are it is at a much lower price. So, Oz income will drop severely -large numbers of people will continue to be laid off, house prices will plummet along with interest rates.
The government may like to spin it differently but it's going to get a lot grimmer before it gets better. And that means it will stay grim until the US starts to pick-up.
#207
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
Maybe turn the Opera House into an RSL and install thousands of pokies, cigarette vending machines and alco pop happy hour 24 hours.
Agree
My thoughts were also to raise GST to 15% or higher on:
Cigs (100%) sorry smokers but its for your own good
Alcohol (wine 15% drinks that encourage binge drinking 20%)
Gambling (perhaps 20%)
Fast food (anything served too eat with calorie and fat combination over a specified healthy range 20%)
My thoughts were also to raise GST to 15% or higher on:
Cigs (100%) sorry smokers but its for your own good
Alcohol (wine 15% drinks that encourage binge drinking 20%)
Gambling (perhaps 20%)
Fast food (anything served too eat with calorie and fat combination over a specified healthy range 20%)
#208
Joined: Jun 2006
Posts: 4,555
Re: If the recession bites do you think housing will plummet?
Like the rest of the world Australia will pick up when the global banking system has worked through the bad debts. Luckily the banking system here has been more responsible and currently has less bad debt to consume. Unfortunately the high current account defecit and the dependence on overseas finance is coming home to roost.
The other factor is that Australia is more dependent on Asia than the US and Europe. Right now Asia is hit hard. Is Asia's recovery dependent on the US or can it generate a larger internal economy to replace lost US and European exports?
The other factor is that Australia is more dependent on Asia than the US and Europe. Right now Asia is hit hard. Is Asia's recovery dependent on the US or can it generate a larger internal economy to replace lost US and European exports?
Anybody who believes Oz will not be very severely hit by the recession is living in a fools paradise.
The economics are simple - Oz is a small country that relies heavily on exporting commodities. Oz is not self-sufficient.
The buyers - China especially - just aren't buying, or if they are it is at a much lower price. So, Oz income will drop severely -large numbers of people will continue to be laid off, house prices will plummet along with interest rates.
The government may like to spin it differently but it's going to get a lot grimmer before it gets better. And that means it will stay grim until the US starts to pick-up.
The economics are simple - Oz is a small country that relies heavily on exporting commodities. Oz is not self-sufficient.
The buyers - China especially - just aren't buying, or if they are it is at a much lower price. So, Oz income will drop severely -large numbers of people will continue to be laid off, house prices will plummet along with interest rates.
The government may like to spin it differently but it's going to get a lot grimmer before it gets better. And that means it will stay grim until the US starts to pick-up.
#210
Re: If the recession bites do you think housing will plummet?
Anybody who believes Oz will not be very severely hit by the recession is living in a fools paradise.
The economics are simple - Oz is a small country that relies heavily on exporting commodities. Oz is not self-sufficient.
The buyers - China especially - just aren't buying, or if they are it is at a much lower price. So, Oz income will drop severely -large numbers of people will continue to be laid off, house prices will plummet along with interest rates.
The government may like to spin it differently but it's going to get a lot grimmer before it gets better. And that means it will stay grim until the US starts to pick-up.
The economics are simple - Oz is a small country that relies heavily on exporting commodities. Oz is not self-sufficient.
The buyers - China especially - just aren't buying, or if they are it is at a much lower price. So, Oz income will drop severely -large numbers of people will continue to be laid off, house prices will plummet along with interest rates.
The government may like to spin it differently but it's going to get a lot grimmer before it gets better. And that means it will stay grim until the US starts to pick-up.