Housing affordability improves as rates, prices fall

[Indifference]

http://www.asx.com.au/data/trt/ib_expectation_curve_graph.pdf

Wow!

I'm not surprised at all & have been advocating a continued downturn for quite some time.

Interest rates will continue to fall throughout the year and probably into 2013 as the economy continues to slide along with the rest of the world. Overall, the property market will continue to shed previous gains as we are not yet at the bottom of the cycle.

Employment will really start feeling the pain going into 2013 as jobs continue to shift from the ailing retail sector, into the resource industry.

More tough times ahead and no sign of a turnaround in the foreseeable future. Housing affordability will continue to improve for those that can maintain stable employment.

 

[Indifference]

The argument that I've heard is that the stimulus is building up inflationary pressures in the system, which could lead to it rising as the economy recovers.

........

........

Talk of economic recovery is premature IMHO.

We still haven't hit bottom yet...

 

[Graemsay]

I think that it depends where you are.

The US is showing signs of a weak recovery. Whether or not it's sustainable is a different matter.

The UK is pretty much bouncing along the bottom. It's been up for a few quarters, then down again. I think that Ireland is much the same, albeit in a worse place.

I'm not sure about Greece. It could be worsening, though their deficit is under control, and they might start to turn around. A lot of problems there are political.

Spain seems to be on a downward slope, and France might not be far behind.

 

[BayView]

If someone buys a house today, mortgaged to the gills at low rates and interest rates started going up 6 months down the track and they are forced to sell was the property really affordable even though they had the ability to service the loan at lower rates?

There was once a time when banks would only allow you to have a total of 35% of your gross income tied up in loan repayments across all debts. Then they relaxed their rules for a while, and things went bad, and then they went back again.

The problem is; a lot of folk want to borrow more than the banks would like them to, so they find ways to get around the banks hoops. They shoot themselves in the foot.

Is the property correction over?
Only once sellers have the brains to not set their price expectations too high

It's self regulating. Sellers have been trying to get top dollar since god was a boy. Buyers have been trying to get bottom dollar since god's dad was a boy.

Don't keep crying about how expensive housing is; it always has been expensive, otherwise we'd all own about 50 of 'em.

 

[Africandaisy]

Homes across Australia are now at their most affordable in two years as falling interest rates and a slide in house prices put property ownership in reach of more households.

But even if you can theoretically 'afford' to buy, you won't actually buy if you are realistically concerned about losing your job.

 

[TomW]

Greece leaves the Euro minimum 10% drop in the national median price over 12 months.

 

[china]

Based on statistics roughtly 33% rent....

Are u of the opionion that we will see this figure rise as in many western countries?

With any discussion on housing affordability, it needs to be borne in mind that according to the australian bureau of statistics, about 10% of first home buyers buy their home with cash outright - no mortgage. This shows that there is often a media beatup about unaffordability.

 

[tambourineman]

With any discussion on housing affordability, it needs to be borne in mind that according to the australian bureau of statistics, about 10% of first home buyers buy their home with cash outright - no mortgage. This shows that there is often a media beatup about unaffordability.

sound like "first home buyers" in Australia but perhaps experienced investors from overseas. I find it very difficult to believe a FHB could pay over $400k cash for house, plus say $50k of fees.

 

[BayView]

But even if you can theoretically 'afford' to buy, you won't actually buy if you are realistically concerned about losing your job.

Who's concerned?

Didn't you hear the news this week; the latest GDP figures say it all!

 

[Van Persie]

I'm probably getting off point here.

IMSHO (In my silly humble opinion) I think this invisible wealth in property in AUS has to stall to let the economy catch up.

Production in the economy will be absolutely phenomenal over the next 20 years with unbelievable growth, and new industries created beyond most of our current imaginative scopes. We are still unconsciously so untapped as to what we can achieve.

There will most likely though be a lag or drop in house prices over the next 5-15 years as the up and coming generations replace the production and spending of the down scaling baby boomers generation.

I see a deflationary economy as a brilliant opportunity for our children and grand children to prosper and grow.

This median house price:median wage is unsustainable and banks overleveraging and blowing up private debt is unsustainable long term. We are already seeing signs of this de-leveraging.

Those of us who are over leveraged as I am need to find a way of increasing disposable income and paying down debts to manageable levels, I believe IMSHO

 

[Aaron_C]

Production in the economy will be absolutely phenomenal over the next 20 years with unbelievable growth, and new industries created beyond most of our current imaginative scopes. We are still unconsciously so untapped as to what we can achieve.

From where, exactly?

 

[Van Persie]

From where, exactly?

Created... thought up, acted upon. Bill gates was quoted as saying the Internet wont last, Face who? The Wright brothers were bicycle mechanics, Edison was considered mad when he thought up transmission of voices by electricity.

Many of the ideas that will become actively realised to produce an evolving economy over the next generation would now be considered by 98% of people, madness and ridiculous.

 

[Van Persie]

People will think them up and act upon them. If you dare to really know why that 2% are so successful, refer to this brilliant offer of information from Rixter:

http://www.bplsp.com/Main/Sub-Pages/Success-Puzzle-Download/

Keep in mind most people will laugh at you when you tell them or show them this. Most people will ridicule it. The minority who don't are very, very wealthy in every aspect of their lives.

Even the ones who live in the Western/Northern suburbs.

 

[Aaron_C]

I don't disagree with the notions of creativity creating new industries etc. It just won't happen in Aus - America maybe though.

 

[Van Persie]

I don't disagree with the notions of creativity creating new industries etc. It just won't happen in Aus - America maybe though.

Yes that is more likely to be true, and for Aus to follow suit further on.

 

[BayView]

I don't disagree with the notions of creativity creating new industries etc. It just won't happen in Aus - America maybe though.

What he said.

Unless we can get back to a labour cost comparable to the "new" economies...

The USA has the benefit of a never-ending supply of laborers who walk across the border from the south to keep their costs low.

We unwittingly killed the golden goose a few decades ago - notwithstanding mining etc which has to be produced here due to it being beneath Aus soil.

 

[Graemsay]

I don't know the Aussie economy as a whole, but there's a healthy start-up culture in the IT sector. In the UK the banks tend to hoover up a lot of the talent, and if you can earn $200K to $300K with minimal risk in that sector, why try something riskier?

The PR is that there are a number of US based VC funds taking an interest in Australian companies, and there have been a few successes.

Labour costs can be brought down. Germany was the sick man of Europe ten or fifteen years ago, and the government, employers and unions came up with the necessary reforms and agreements to reduce wages and improve productivity. There's no reason why Australia couldn't perform the same trick.

It strikes me that Australia should be trying to move up the value chain with the mining industry. For example, why not refine iron ore locally? You'd reduce the shipping costs, which might go some way to offsetting the labour costs of transporting the ore to China.

Alternatively start refining rare earth elements in Australia. (Despite their name they're not that uncommon.) China has a stranglehold on the market, but they use relatively inefficient processes. Being a bit smarter could result in you being competitive, and you'd have a certain amount of political support from non-Chinese companies and governments who'd like an alternative, friendly supplier.

 

[BayView]

I don't know the Aussie economy as a whole, but there's a healthy start-up culture in the IT sector. In the UK the banks tend to hoover up a lot of the talent, and if you can earn $200K to $300K with minimal risk in that sector, why try something riskier?

Correct; why would you bother being anything else?

Labour costs can be brought down. Germany was the sick man of Europe ten or fifteen years ago, and the government, employers and unions came up with the necessary reforms and agreements to reduce wages and improve productivity. There's no reason why Australia couldn't perform the same trick.

bwahahaha!
Sorry; shouldn't laugh.
Would you like to be the first to volunteer for the necessary income cut?

For example, why not refine iron ore locally? You'd reduce the shipping costs, which might go some way to offsetting the labour costs of transporting the ore to China.

Um, I reckon the big boys on the board of directors have looked at this over a beer in the pub, and have already worked out that they can save money by doing it the way they are doing it now.

See; it's actually cheaper to ship it over seas than to pay us Aussies to do it. This would be my guess why almost all manufacturing has left Australia - other than that which simply must be made here due to geographical reasons; as I've said.

And; look at the latest mining project that Gina is undertaking; she needs to employ 1700 foreign workers to do the jobs Australians won't do..... "won't do"???? what the hell does that mean?

Alternatively start refining rare earth elements in Australia. (Despite their name they're not that uncommon.) China has a stranglehold on the market, but they use relatively inefficient processes. Being a bit smarter could result in you being competitive, and you'd have a certain amount of political support from non-Chinese companies and governments who'd like an alternative, friendly supplier.

Sounds all warm and fuzzy, but big companies like......money.
I think many businesses could be more competitive through things such as newer technology to lower wage costs (less staff) and other operating costs, but such things aren't always possible to buy. Banks aren't exactly throwing money at businesses these days, so simply picking up the phone and ordering that new you-beaut system probably won't be that easy.

 

[china]

Labour costs can be brought down. Germany was the sick man of Europe ten or fifteen years ago, and the government, employers and unions came up with the necessary reforms and agreements to reduce wages and improve productivity. There's no reason why Australia couldn't perform the same trick.

It strikes me that Australia should be trying to move up the value chain with the mining industry. For example, why not refine iron ore locally? You'd reduce the shipping costs, which might go some way to offsetting the labour costs of transporting the ore to China.

You have hit the nail on the head. The number one reason why Australia is so unproductive is that labour costs are too high and our workers are far too unproductive. Instead of concentrating on the work at hand, they concentrate on when the next sickie should be and when the next tea break is. Instead of being grateful for having a job, the Australian worker possesses a sense of entitlement for massive wages and benefits.

This is ingrained in Australian culture and perpetuated by the unions, which are in themselves rorts - see craig thomson affair.

I think this culture will never really change.

 

[BayView]

You have hit the nail on the head. The number one reason why Australia is so unproductive is that labour costs are too high and our workers are far too unproductive. Instead of concentrating on the work at hand, they concentrate on when the next sickie should be and when the next tea break is. Instead of being grateful for having a job, the Australian worker possesses a sense of entitlement for massive wages and benefits.

This is ingrained in Australian culture and perpetuated by the unions, which are in themselves rorts - see craig thomson affair.

I think this culture will never really change.

Case(s) in point;

1.Teachers (I am a total supporter of Education and teachers, by the way - but...) - amazingly and totally accidentally were able to arrange a stop work day on Thurs, and a curriculum day on Friday...right before the Queen's B'day long w'end.

2. Building Trade - amazingly were able to co-ordinate an RDO on Tues (normally on Mon) directly after the Queen's B'day long w'end, and every building site down here empty after midday last Friday.

I used to go out with a girl many years ago who worked for State Insurance. In the first half of the year, she worked a full 5 day week on approximately 5 of the weeks up until the Queen's B'day w'end due to all of the above "wins". Great if you can get it suppose, and there were RDO's built up from working a few extra mins each day.

But that's the thing; Aussies are happier to have less time at work and have more time off (even with overtime penalty rates), and the various Gubbmints have seen to it that it is unattractive to stay at work longer and earn more through higher taxation on their labour.

To clarify though; it's not the actual hourly rate of labour cost that is too high in Aus; it is all the other freebies that go along with it that cost the employer so much; the penalty rates, the paid tea breaks, the Worker's Comp insurance, the super guarantee, the loading on holidays, the umpteen paid sick days and accruing sick leave, the redundancy pay-outs, the 3 written warnings, the unfair dismissal stuff...and on and on.