kissfan said:
I agree that it is not a job but as a rough measure overall the percentages of job hours is roughly the same. So 10% verus 5% does matter.
Peter 147
Rate fears mount as jobs boom
- Thread starter Punchy
- Start date
I agree that it is not a job but as a rough measure overall the percentages of job hours is roughly the same. So 10% verus 5% does matter.
Peter 147
Hi ya Pete.Peter 147 said:
I'm just trying to say that someone who was not working and now has a casual job working only a few hours a week will not be in a much better off position yet the government will use figures to show these people working so they can then turn around and say "because of the low unemployment rate we can blah blah blah". The picture they paint (or try to) to the general public is not actually how things are.
Regards
Marty
crest133 said:As an economist, I make a great plumber. So any helpful comment would be appreciated.
Anyone care to hazard a guess what happens to the real estate market and the stock market respectively as interest rates rise ?
How would an interest rate rise affect Sydney properties generally ?
How would it affect the stock market ?
crest133
HI All
I am also not an economist but have a good feel for what makes commonsense.
Now I cannot comment on other markets but I know Sydney and here prices are effected by a lot of things.
How would an interest rate rise affect Sydney properties generally ?
In Sydney you have three markets, PPOR, FHO and IP.
Ignore PPOR as this is less rate influenced I think. It is more company bonuses, family growth or down sizing that drives here. But IP and FHO is rate focused and they are in reverse.
You see in Sydney FHO buy anything up to $500k and are happy to do so. Bargain they cry!
I know in Adelaide, Brisbane, most elsewhere and regionals there is no way a young couple in their late 20's would commit to $500k.
But here FHO earn big $$$$. Most professional Women are on $40k min. and Men the same+. A few years experience and their wage can rise a lot faster.
So they can afford the repayments but they have one problem. The deposit.
Having to find 20% deposit is hard at $500k. Let say we examine $450k a typical run down terrace in Surry Hills, Redfern, Waterloo if you look really hard and like to renovate, a lot. Deposit is $90k. SD is around 5% so another $20k. Plus legals and such say $5k.
So what $ do they have to have in the bank, from the parents etc.. $115k to buy $450k home.
So when rates go up it helps them because prices go down. Serviceability is not the problem.
Now with the SD exemption up to $500k you are saving $25k UP FRONT. That’s why Sydney has not crashed because it was introduced just when things started to drop.
The reverse is IP. Add the whammy of land tax and exit tax and 3% return and it aint pretty. Investors have the equity but not the serviceability or at the moment, the interest.
So you can see the Sydney market is very tribal to suburbs and the economy.
Every one on my FHO professional friends have scrapped the deposit to buy because they want to get in regardless of rates. They simply eat at home. Work 60hrs a week to get a promotion. Own an old car or no car (remember in Sydney you don’t need car if you live in the inner city unlike regional and other capitals) and save $20k in bad debt. Or have a Company Car.
Also Sydney is the land of milk and honey when it comes to jobs and wages. Example: Mrs 147 was terminated from her employer in Dec due to a back injury and found a new employers, same money, willing to take her on in one week of trying in Jan. Two days ago another competitor called up to head hunt her. It is that competitive for good people. She earns well above average male let alone female annual income, and frankly, could earn more if she was driven by money.
So consider this....if 4M Sydney and 3M Melbourne of the population 7M out of 20M is doing ok and/or very ok that is more than 30% of the consumers feeling comfortable and consuming imports
And before you say yes but your a latte sipping yuppie and what about Mr and Mrs Western Sydney who bitch and moan about rates in the papers and ACA?
Well have a good look at their car/s ( new commodore or falcon) they drive and mum car ( 4wd) and the new pool or extension. They are the consumers. Us yuppies simply use services like restaurants and cafes. Our houses are too small to fit Plasma screens.
Peter 147
kissfan said:
Hey marty
I agree with you. Inf act I would not be suprised to see the Gov downplaying the employment figures because of RBA rate fears. Mark my words the recent jump in oil willhave costello saying words tot heeffect " extrenal risk, world economy fragile, etc" anything to stop the RBA acting.
Peter 147
I think that the comments we see in the media at the moment are (as often) a little bit exagerated.
There is no evidence that inflation is out of control, or even about to rise out of control.
3 year bonds are at 5.4%. 10 year bonds are at the same level. This indicates that the financial markets do not expect interest rates to rise significantly.
Yes, we may see a rate rise soon. But it is more likely to be a "message" from the RBA not to over-commit with borrowings rather than the beginning of a big jump in interest rates.
Today, Howard said the budget this year would be tight. He's also concerned that a large rise in interest rates would be unpopular.
Just my 2% worth.
Cheers,
There is no evidence that inflation is out of control, or even about to rise out of control.
3 year bonds are at 5.4%. 10 year bonds are at the same level. This indicates that the financial markets do not expect interest rates to rise significantly.
Yes, we may see a rate rise soon. But it is more likely to be a "message" from the RBA not to over-commit with borrowings rather than the beginning of a big jump in interest rates.
Today, Howard said the budget this year would be tight. He's also concerned that a large rise in interest rates would be unpopular.
Just my 2% worth.
Cheers,
Hi Guys,
I do feel that the I/Rate will rise as I had all my IPs fixed last year in anticipation, but as far as the building trade is concerned "Housing" the firm I work for supplies Wholesalers, Retailers and builders alike in Perth, Adelaide, Melbourne, Sydney, most areas in Queensland and have seen a massive drop in orders, plus cancellations or reductions of orders that had been placed for the next few months, even a drop in sales in our own retail outlet at our factory.
Had the NSW & Qld manager of another major manufacturer of timber products (Housing) in today and he told me that they have had the worst January sales on record for their firm.
I am going to have to cut the hours of at least another 9 staff next week that brings it up to 15staff with reduction in hours in the last 2 weeks and as yet I have not brought all staff back from our Xmas break back either. Have never seen it this grim.
An I/Rate rise I feel will make things worse, but that is only a gut feeling as I am not an econamist, just a guy who runs a factory and over time you just get to know what is affecting your bussiness.
Anyway they are only my thoughts.
Regards
John
PS: This is not a plug but this is the company website so you can see what we supply to get a better understanding of the bussiness I am in. www.trupine.com.au
I do feel that the I/Rate will rise as I had all my IPs fixed last year in anticipation, but as far as the building trade is concerned "Housing" the firm I work for supplies Wholesalers, Retailers and builders alike in Perth, Adelaide, Melbourne, Sydney, most areas in Queensland and have seen a massive drop in orders, plus cancellations or reductions of orders that had been placed for the next few months, even a drop in sales in our own retail outlet at our factory.
Had the NSW & Qld manager of another major manufacturer of timber products (Housing) in today and he told me that they have had the worst January sales on record for their firm.
I am going to have to cut the hours of at least another 9 staff next week that brings it up to 15staff with reduction in hours in the last 2 weeks and as yet I have not brought all staff back from our Xmas break back either. Have never seen it this grim.
An I/Rate rise I feel will make things worse, but that is only a gut feeling as I am not an econamist, just a guy who runs a factory and over time you just get to know what is affecting your bussiness.
Anyway they are only my thoughts.
Regards
John
PS: This is not a plug but this is the company website so you can see what we supply to get a better understanding of the bussiness I am in. www.trupine.com.au
Hi All
I should qualify I predict two rate rises and then a pause of twelve months then may be a drop. However I am only 50% sure because of chaos theory and who knows the future.
But I have put my money where my mouth is and fixed my rates in Aug 2003 at 6.09% for 5 years. Back then the ten year bonds did not predict a rise either but they did. At the time I was annoyed I missed out by two weeks getting 5.99%.
I also moved to fix my sisters rates a year later at 6.89% however unexpected income for her has made this not a good move due to break penalty costs however in the end , we played safe and she is well ahead overall.
So fixing does have risks. I personally see it as insurance.
IMHO the question we should be asking it not will rate rise and how much but how much debt will be effected.
I have heard that 7.5% overall will be equal to 17% in the 1990 due to higher debt. I dont know about this.
It seems to not make sense.
Back in 1990 I had a debt of $70K and paying 13% ( fixed again you see) but wife was earning only $18K and me say $30k p.a.. This is 68%.
As we now own our PPOR we cannot compare but neighbours who earn $80K each so household of $160k have debt around $330k. This is 48% . They are worst off by amost 50%.
However you cannot be that simple. in 1990 we had a fibro box on 1100 sqm metres we split and developed. The box is still called by Mrs 147 as the "sh*t box". Our debt was good.
Anyone out there happy to give some more example so we can compare how much an extra .5% will hurt?
Peter 147
I should qualify I predict two rate rises and then a pause of twelve months then may be a drop. However I am only 50% sure because of chaos theory and who knows the future.
But I have put my money where my mouth is and fixed my rates in Aug 2003 at 6.09% for 5 years. Back then the ten year bonds did not predict a rise either but they did. At the time I was annoyed I missed out by two weeks getting 5.99%.
I also moved to fix my sisters rates a year later at 6.89% however unexpected income for her has made this not a good move due to break penalty costs however in the end , we played safe and she is well ahead overall.
So fixing does have risks. I personally see it as insurance.
IMHO the question we should be asking it not will rate rise and how much but how much debt will be effected.
I have heard that 7.5% overall will be equal to 17% in the 1990 due to higher debt. I dont know about this.
It seems to not make sense.
Back in 1990 I had a debt of $70K and paying 13% ( fixed again you see) but wife was earning only $18K and me say $30k p.a.. This is 68%.
As we now own our PPOR we cannot compare but neighbours who earn $80K each so household of $160k have debt around $330k. This is 48% . They are worst off by amost 50%.
However you cannot be that simple. in 1990 we had a fibro box on 1100 sqm metres we split and developed. The box is still called by Mrs 147 as the "sh*t box". Our debt was good.
Anyone out there happy to give some more example so we can compare how much an extra .5% will hurt?
Peter 147
confused
hi everyone,
I must agree with brizzyboy about the state of building supplies sales. Our recycled timber yard ( we also sell new timber products ) has experienced a major slow down in sales in the last few months. All of the reps who drop by confirm that it is slow everywhere. We have just laid off a few guys and made a few others casual. We get a lot of renovators and landlords in and it could be that the exit tax has made an impact. However, we are down on the same time last year by about 60%. A real worry.
I just heard Alan Kohler the ABC guy say that the latest figures show that the housing slowdown is over............
Now I'm really confused??
Cheers
Jared
hi everyone,
I must agree with brizzyboy about the state of building supplies sales. Our recycled timber yard ( we also sell new timber products ) has experienced a major slow down in sales in the last few months. All of the reps who drop by confirm that it is slow everywhere. We have just laid off a few guys and made a few others casual. We get a lot of renovators and landlords in and it could be that the exit tax has made an impact. However, we are down on the same time last year by about 60%. A real worry.
I just heard Alan Kohler the ABC guy say that the latest figures show that the housing slowdown is over............
Now I'm really confused??
Cheers
Jared
Peter 147 said:Hi All
I have heard that 7.5% overall will be equal to 17% in the 1990 due to higher debt. I dont know about this.
It seems to not make sense.
Back in 1990 I had a debt of $70K and paying 13% ( fixed again you see) but wife was earning only $18K and me say $30k p.a.. This is 68%.
As we now own our PPOR we cannot compare but neighbours who earn $80K each so household of $160k have debt around $330k. This is 48% . They are worst off by amost 50%.
Peter 147
Peter 147, you are using gross income figures. A person on $80K is going to be paying top tax $$$... To be exact, $24,407 and that's not including the Medicare levy or HECS. Our tax rates are not tied to the CPI so we are in effect paying much much higher taxes than we were in 1990. Then there is the GST...
OSienna said:
Very good point. Also petrol is more expensive , food , etc..
Some items are cheaper or the same, cars, electronic equipment, computers, .
I guess this is why all comparisions of statistics are flawed.
So if most things cost more and tax is taking more and debts are higher then yes, rates increases will hurt more than before .
Peter 147
rates
IMHO rates will peak at .5% increase for 36ths, thats if they get that far.
Reasons for this are due to the fact there has been no rises for such a long time,,, just a little rise of .25% will scare the general public . Majority will stop eating out and taking family outings that previously cost a large amout. Some will stop buying new cars, Large screen tv's, and stay away from walking the floors of harvey norman stores.
Due to the incorrect data on jobs, (casual work countered as fulltime) the effect on a rate rise could mean so much more than ever before
This will mean jobs will go as a result BUT does this mean things will get back to where we are now?
Is this fair comment???
What are all forum thoughts on this?
OV
IMHO rates will peak at .5% increase for 36ths, thats if they get that far.
Reasons for this are due to the fact there has been no rises for such a long time,,, just a little rise of .25% will scare the general public . Majority will stop eating out and taking family outings that previously cost a large amout. Some will stop buying new cars, Large screen tv's, and stay away from walking the floors of harvey norman stores.
Due to the incorrect data on jobs, (casual work countered as fulltime) the effect on a rate rise could mean so much more than ever before
This will mean jobs will go as a result BUT does this mean things will get back to where we are now?
Is this fair comment???
What are all forum thoughts on this?
OV
Todays the day for wages. If over 0.9 that is above average and will fuel a rate rise.
Regards Peter 147
Regards Peter 147
demoman said:hi everyone,
I must agree with brizzyboy about the state of building supplies sales. Our recycled timber yard ( we also sell new timber products ) has experienced a major slow down in sales in the last few months. All of the reps who drop by confirm that it is slow everywhere. We have just laid off a few guys and made a few others casual. We get a lot of renovators and landlords in and it could be that the exit tax has made an impact. However, we are down on the same time last year by about 60%. A real worry.
I just heard Alan Kohler the ABC guy say that the latest figures show that the housing slowdown is over............
Now I'm really confused??
Cheers
Jared
Hey Jared (& Brizzyboy) may I suggest don't be confused / be vocal - perhaps if all the traders in your industry flooded the Sunday papers letetrs to the editors with how wrong the RBA / Govt is getting it we might see some less rash decision making.
Have to say how relieved I am to have a federal govt that knows how to keep the economy running like a well oiled machine .. well at least for the first 5 months, I guess the nose dive starts in March. Joy.
I think I can honestly say I don't know a single person in business in brisbane where their business is booming.
Thumbs down to costello & howard & their crappy promises..next thing you know they'll be backflipping on the troups in Iraq..oh yeah they're already doing that..why did people vote for them again?
Jase
