Is Australia facing an economic downturn/recession?

[MangoMadness]

I could be totally wrong (it can happen ) but here are some thoughts on that link

"•A typical Sydney house costs $400-500 per week to rent, or $ 1200-1500 to own"

Plugging into CBA's online calculators $1200 a week in repayments repays a 30 year loan of $720000.

Is a typical sydney house really worth that much? I dont really know, sounds quite high though especially since I am using the low end of the reported scale ($1200)

Also would a $720k house really rent for $400 a week? Once again i dont know, but that doesnt sound right to me

Just my thoughts

 

[Aaron Sice]

you may find it's more than just mortgage payments, includes rates, water, insurance etc versus just paying rent.

it's a nice way to skew figures.

 

[MangoMadness]

you may find it's more than just mortgage payments, includes rates, water, insurance etc versus just paying rent.

it's a nice way to skew figures.

Ahh yes, good call!

 

[Aaron_C]

There's definitely economic pain being felt around the place. Also, I believe new home starts are down. Given that population is still increasing, it will be interesting to see how much time it takes for supply to be constrained (where it isn't currently).

Hopefully I can find a builder if so many people are going bust

 

[VYBerlinaV8]

Hopefully I can find a builder if so many people are going bust

And get him to give you a good price!

 

[JohnHenry]

Yes, it seems that we are all going down to the deep dark valley of GFC Part #2
with our AUD$ getting weaker.

according to this article from RBA: http://www.rba.gov.au/publications/smp/2011/aug/html/index.html

The Bloomberg news: http://www.bloomberg.com/news/2011-...a-growth-this-year-raises-inflation-view.html

and this one also: http://www.news.com.au/business/mar...-drop-since-2008/story-e6frfm30-1226108790146

but that means the interest rate could be lowered down in the next few months thus making the house price up so even higher since more people buying some more properties.

What are your comments and thoughts regarding this recent event ?

 

[Aaron_C]

And get him to give you a good price!

heh I wish

 

[josko]

Yes, it seems that we are all going down to the deep dark valley of GFC Part #2
with our AUD$ getting weaker.

but that means the interest rate could be lowered down in the next few months thus making the house price up so even higher since more people buying some more properties.

What are your comments and thoughts regarding this recent event ?

Yep...down we go.

Yet...the AVERAGE investor is not many of us on this forum. Don't forget.....consumers, the mums and dads...are sitting tight and aren't going to race out and buy properties because interest rates are down. They will be more worried about keeping their jobs and electricity bills.

Gillard is doing a damn good job of taking ANY confidence ANYONE has and stomping her thinned out soles of her shoes all over it.

The ole Low DOC from yesterday is gone and money just isn't as easy to get your hands on. Banks will be VERY nervous right now....


Regards JO

 

[TomW]

Yes, it seems that we are all going down to the deep dark valley of GFC Part #2
with our AUD$ getting weaker.

according to this article from RBA: http://www.rba.gov.au/publications/smp/2011/aug/html/index.html

The Bloomberg news: http://www.bloomberg.com/news/2011-...a-growth-this-year-raises-inflation-view.html

and this one also: http://www.news.com.au/business/mar...-drop-since-2008/story-e6frfm30-1226108790146

but that means the interest rate could be lowered down in the next few months thus making the house price up so even higher since more people buying some more properties.

What are your comments and thoughts regarding this recent event ?

You have to be kidding. If GFC part 2 happens we'll be lucky if house prices stay stable. Absent massive Government intervention they will likely fall (by how much is the question).

 

[Sunfish]

GFC I happened when the banks ran out of money. GFC II will be different. That's when the govnuts run out of money.

Who has the billions to reignite RE this time? Not me.

 

[BayView]

but that means the interest rate could be lowered down in the next few months thus making the house price up so even higher since more people buying some more properties.

Even though houses may be cheaper in the near future, there will be far less buyers who can actually qualify for finance, or a decent level of finance.

Given that many Aussies are not really in good financial positions overall (even though the savings rates have increased apparently), this means fewer loans being given out by the banks.

 

[Sunfish]

There are millions of empty houses in the US and millions of once middle class sleeping in their cars.

The houses are cheap so why don't they just buy one? Everyone NEEDS a roof over their head after all.

 

[BayView]

There are millions of empty houses in the US and millions of once middle class sleeping in their cars.

The houses are cheap so why don't they just buy one? Everyone NEEDS a roof over their head after all.

The middle class American is typically over 100% in debt (or near it). This means they spend (or have been spending) more than they earn.

When they lose their job, or get sick (and lose their job because of this), they have nothing to fall back on, and lose their house.

From here, it is pretty much impossible to get a loan to buy even the cheap houses on offer (which often have tax liabilities on them to be paid out in the event of a purchase).

Renting requires bonds and an amount of rent in advance to get into a place, so that's out too.

Hello to the back seat living room.

An unforseen serious illness will also trigger all of the above, as many folk either cannot afford private health insurance, or have a pathetic level of cover which won't cover the entire bill, and is hellishly expensive, or even if their employer pays their health insurance as part of their salary package, the employers over there will often let you go if you are off sick for a time, so you lose your health insurance and your job, and then all of the above occurs.

Medical bills are the biggest cause of bankruptcies in the USA.

 

[random]

If I was out of a home over there I'd just go vendor terms on one , there must be 1000's on offer from desperate sellers!

Cheers

 

[locko24]

There are millions of empty houses in the US and millions of once middle class sleeping in their cars.

The houses are cheap so why don't they just buy one? Everyone NEEDS a roof over their head after all.

Still holds true - unless they're sleeping in convertibles!

 

[Different Here]

This can't be good for Aussie house prices!

World on an economic precipice: ANZ

The world economy is on the edge of another economic crisis, ANZ chief executive Mike Smith says.

Mr Smith said the fragile economic situation in the US and Europe in particular, was "delicately poised" and this was likely to cause global markets to remain volatile for some time to come.

He labelled Europe "a mess" and warned that failure by political leaders to tackle the economic problems could lead to a much wider global crisis.

Continues

 

[StefanA]

The Great Divergence

 

[StefanA]

Damned.....We need to process those asylum seekers more quickly (in the affirmative) so they can buy more stuff from Aussie retailers.

Shouldn't retail growth in real terms, not nominal, track population growth, if Australia is as wealthy as our Lord and Masters tell us?

 

[Aaron Sice]

my predictions >

1) IRs to come down.
2) banks pass on in full.
3) stabilising of house prices for a little.
4) confidence still shot, so economy continues to sink.
5) house prices lag further.
6) AUD comes down, price of gold in AUD soars again.
7) carbon tax axed.
8) labor voted out and greens lose power.
10) new govt gets everyone in a chipper mood and confidence picks up slowly.

 

[zed_kid]

my predictions >

1) IRs to come down.
2) banks pass on in full.
3) stabilising of house prices for a little.
4) confidence still shot, so economy continues to sink.
5) house prices lag further.
6) AUD comes down, price of gold in AUD soars again.
7) carbon tax axed.
8) labor voted out and greens lose power.
10) new govt gets everyone in a chipper mood and confidence picks up slowly.

That would be tops!

Anything about the relaxation of FIRBs in your predictions?