I chose April Fool’s day in 2008 to post the following comments on Blogocracy, but I wasn’t playing a ‘doom and gloom’ prank, I was deadly serious:
The average price of housing is currently estimated at $470K – taking that figure into account, and lets face it, the housing market has taken off like a rocket since 2000 – then I’d have to say its time for the brakes to be applied because if it’s beyond average Australians to afford and beyond the banks and other lending institutions willingness to lend, what hope is there that prices will continue to rise at traditional rates.
Recent figures also claimed that for each $1.00 of income people were earning they also carry $1.60 worth of debt on average.
My other concern is that along with overpriced housing we’re also having to contend with a stock market that continues to shed billions in value and a level of consumer debt never experienced before.
In the past many investors have usually had the luxury of entering and exiting either market when growth slowed or reversed in the other. There seems to be little escape now except for pulling out of both markets and placing gains in a savings account, and then there are some whose personal wealth has been badly mauled by the stock market declines.
My point? It could get much worse before it gets better and expectations based on what has happened in the past may not be the case this time around (i.e 1929 and 1987). Will things get much worse before they start getting better? I suspect this may be the case.
THE wealth of average Australians has plummeted by a record 9 per cent – or about $19,000 for every man, woman and child – as the global financial crisis bites. New figures show national wealth in property, shares and other assets sank to $4956 billion in third quarter of last year, from $5281 billion 12 months ago.
The average Australian is now worth about $231,000, down from a high of $250,000 in September 2007.
The massive financial toll comes amid predictions of a looming recession which would wipe even more off battler’s bank balances.
Fears of mass layoffs were fueled yesterday with the announcement by mining giant BHP Billiton that it would axe 3300 Australian jobs.
“What we are seeing today is a sober reminder of the unwinding of the mining boom, caused by the global financial crisis and in particular the slowing of the economy in China,” Treasurer Wayne Swan said.
The Government is now under increasing pressure to unveil its second round of stimulus measures to keep the economy ticking over.
CommSec said the Federal Government should respond to the drastic circumstances by temporarily cutting the GST and bringing forward scheduled tax cuts to March.
Prime Minister Kevin Rudd yesterday vowed to be frank with Australians on the impact of the financial crisis. “I don’t intend to guild the lilly one bit,” he said.
“What I intend to do is to be upfront about the impact of this global financial crisis on the economy and on jobs all the way through.
” But despite promising a week of speeches setting out the Governments plans to deal with the crisis, Mr Rudd offered no new measures to help Australians keep their head above water.
The downgrade in Australian wealth, revealed in Australian Bureau of Statistics data, was the biggest since records began in 1960.
At the same time, private debt was on the rise, up 5 per cent during the September quarter to $616 billion. Per capita debt rose from $27,450 to $28,000.
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