http://business.smh.com.au/business/housing-recovery-hopes-dashed-20090831-f4jj.html
Dear Mr Zappone,
Let me take the liberty to make some remarks on your today's article "Housing recovery hopes dashed".
For some obscure reason one very simple thing has slipped behid your attention. Why "new housing starts" indicator is so important? Simply because it is connected to GDP like dog is connected to its tail. With the exemption of resource bubles and other abnormalities distorting our economy, GDP lags new housing starts by 3 months. Todays figures mean that in 3 months GDP is going to shrink.
For that reason today's data is in conflict with your statement that interest rates are coming up. This is simply a myth. Befor they come up (in a "good time" like Mr Stevens said) there has to be start to a good time. So far we had the worst reporting season in living memory, and now - grim housing construction data. We have on our hands strong case for lowering interest rates - all points to the blatantly obvious fact that Australia is gradually caving in under the weight of the rates that are the highest in the developed world.
Needless to say that under conditions of the severe undersupply of housing we are in for a price boost like we have never seen before. And please also note that large investment in infrastructure projects that is planned by the Government would divert resources from housing construction, thus increasing the construction costs, slowing down the recovery process and making the property boom potentially the longest in the living memory. I would not even mention that most of capital cities since 2003 experience almost total lack of new land supply.
Hope this helps.
Dear Mr Zappone,
Let me take the liberty to make some remarks on your today's article "Housing recovery hopes dashed".
For some obscure reason one very simple thing has slipped behid your attention. Why "new housing starts" indicator is so important? Simply because it is connected to GDP like dog is connected to its tail. With the exemption of resource bubles and other abnormalities distorting our economy, GDP lags new housing starts by 3 months. Todays figures mean that in 3 months GDP is going to shrink.
For that reason today's data is in conflict with your statement that interest rates are coming up. This is simply a myth. Befor they come up (in a "good time" like Mr Stevens said) there has to be start to a good time. So far we had the worst reporting season in living memory, and now - grim housing construction data. We have on our hands strong case for lowering interest rates - all points to the blatantly obvious fact that Australia is gradually caving in under the weight of the rates that are the highest in the developed world.
Needless to say that under conditions of the severe undersupply of housing we are in for a price boost like we have never seen before. And please also note that large investment in infrastructure projects that is planned by the Government would divert resources from housing construction, thus increasing the construction costs, slowing down the recovery process and making the property boom potentially the longest in the living memory. I would not even mention that most of capital cities since 2003 experience almost total lack of new land supply.
Hope this helps.