Housing Market’s About To Crash In A Big Way

There’s every indication now that tighter lending conditions will hamper recovery in the housing market anytime soon.  In short, ‘the BIG SQUEEZE in lending is on.  As the following news items indicate,  even the enthusiasm generated by the first homebuyers grant can be almost certain to dampen significantly in the months ahead.

Gone are the days, it would seem, that smaller lenders can compete with the BIG FOUR, and back to the days when the BIG FOUR had mortgage lending cornered.

Big Four squeeze smaller lenders

WHEN the Bank of Queensland appointed corporate advisers in December to review acquisitions, strategic partnerships, mergers and possible takeover offers, it sent a clear message that any rival outside the Big Four banks needed a new set of tricks to compete.

Bank of Queensland chief executive David Liddy told shareholders: “To compete with the big banks, smaller banks such as BoQ, as well as credit unions and building societies, have been merging and will continue to do so.”

Two weeks later, on December 24, Wizard Home Loans was sold to Commonwealth Bank and Aussie Home Loans for $26million. The remaining non-bank lenders, Resi Mortgage Corp, First Mac, Pepper Home Loans, Better Choice Home Loans, Beat Home Loans and a few others are expected to either close down or merge as credit conditions worsen.

CREDIT: CBA tightens mortgages amid new rules

THE Commonwealth Bank will tighten borrowing rules for first-home buyers to insist they contribute at least 3 per cent of the purchase price in their own money, in addition to any available government grants.

The move is in response to growing industry concerns about the quality of loans to the fast-growing, first-home buyer market and is in anticipation of interest-rate hikes in coming years, due to the expected inflationary impact of the large, recent increase in household income.

Currently, government grants of up to $14,000 for an existing home and $21,000 for a new home mean some first-home buyers can purchase dwellings with a 5-10 per cent deposit and no cash contribution of their own.

PROPERTY: Sales dry up unless price is right

THE property market has slowed to a whimper, with sales crashing to less than a third of last year’s levels, despite a surge in first-home buyers capitalising on low interest rates and grants.

Just over 500 properties have sold at auction this year in the major markets of Sydney, Melbourne, Adelaide and Brisbane, compared with more than 1800 at the same time 12 months ago.

Only 1775 properties have been placed on the market since January 1, compared with more than 3700 last year.

While auction clearance rates continue to improve, thanks to strong first-home buyer demand for cheaper housing, softness in middle and upper markets is putting the brakes on sales.

Over to you

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72 Responses

  1. Ironically John our neighbours just sold their house for $340 grand here in Waterford West, in Logan QLD…& my Mum’s neighbour sold the other day for 380 grand.

    Obviously some people don’t worry about debt.

    N’

  2. “Obviously some people don’t worry about debt.

    N’”

    It’s quite stunning just how many people who seem to be quite oblivious to just how tight things are going to get. Hopefully they’ve got substantial backing in reserve or were lucky enough to have enough up front to protect them.

  3. So what’s the diff?

    You’re either going to be paying off your own mortgage (a method of saving) or paying off someone else’s (via paying rent).

    At the end of the day everyone needs a roof over their heads.

    I’d sooner be paying off a mortgage than dead money in rent any day…

  4. The question is affordability Reb. If you can fine, if you can’t not so fine. A lot of people can’t for obvious reasons.

  5. True John.

    But at the bottom end of town, the difference between paying off a mortgage versus rent – particularly with the boost to the FHG is negligible, which I guess is why the @rse is falling out of the property market at the top end.

  6. Reb

    “But at the bottom end of town, the difference between paying off a mortgage versus rent – particularly with the boost to the FHG is negligible, which I guess is why the @rse is falling out ”

    For sure reb, the concern I guess is that first homebuyers are able to put down $14K or $21K without have anything to back them up by way of savings.

    The other issue is the prices of property and the repayment schedules. Housing prices have risen well in advance of wages leaving little room to manouvre for far too many should interest rates or the cost of living increase, or they’re hit with job loss etc. I’m a big believer in ‘margins of safety’ whenever investing.

    Shane’s mentioned an applicant’s ability to pay for insurance should the mortagee find themselves in trouble i.e. through injury or job loss etc.

  7. “the concern I guess is that first homebuyers are able to put down $14K or $21K without have anything to back them up by way of savings.”

    But the deposit is always the bug stumbling block for first home buyers. Many have the incomes to support mortgage repayments (and moreso) but because they’re paying rent, it makes it very difficult to save for that initial deposit.

    “No deposit” home loans are not to blame for housing crisis.

    The blame lies on the shoulders of “no doc” or “low doc” lenders…

  8. “It’s quite stunning just how many people who seem to be quite oblivious to just how tight things are going to get. ”

    Too true John…having witnessed & lived the UK recession of the early 80s I don’t envy those who are naive & building a mansion of debt on their backs. It was pretty bad when I got back here in ’82 too. Lines around the block for many jobs…plenty of us living out of caravan parks & old, partially derelict houses.

    Few jobs are safe during deep recessions…if yer lucky you’ll just have to accept a pay freeze, pay cut or be reduced to a three or four day week.

    Having a degree helps…but even that hurdle can change…suddenly the job market contraction means employers want a post-grad over your average degree. Think UK recently and changes to immigration criteria.

    Still, best not to panic. Downturns have alot to do w/ perception & mistrust. Tho many other factors contribute…as we’ve discussed before.

    i hope these overly debt-ladened mortgage payers are prepared to share their homes w/ lodgers…&/or other family members &/or Au-Pairs if things get tough.

    “I’d sooner be paying off a mortgage than dead money in rent any day…”

    Surely the Lord of the Manor owns his abode…paid off by selling the silverware last recession?…

    🙂

    N’

  9. “No deposit” home loans are not to blame for housing crisis.

    The blame lies on the shoulders of “no doc” or “low doc” lenders…”

    Problem reb is we’re ranked amongst the poorest savers in the world and we’re all, in general, carrying way too much debt.

    In fact, It was revealed just last year that Australians are the world’s worst when it comes to saving, by the Investment and Financial Services Association.

    The IFSA report, released in 2007 also showed that on average Australian households have $160 in debt for every $100 they earn. That’s now been revised upward to around $170 or thereabouts.

    These facts combined with Michael West’s revelation’s about total national debt just recently paints a very scary picture in my opinion. West writes:

    “Looking at the numbers, according to the Australian Bureau of Statistics we have about 21,374,000 or so people living in this country. Our combined national debt (taking all government, personal, private and business debt into account) is $2.32 trillion ($3.4 trillion including equity) as of September last year – and growing. A falling Aussie dollar makes it more expensive to repay, or roll over

    ”Malcolm might happily forget that while his former government colleagues were steering the good ship Australia, the nation’s total debt soared from a mere $700 billion in 1997 up to $3.2 trillion by the close of their term. An increase of 387%”.

  10. Reb and N’

    Here’s one area I’ve mentioned on a few occasions to really watch:

    Banks face rising loan losses
    http://business.smh.com.au/business/banks-face-rising-loan-losses-20090223-8fnd.html

    Australian banks are likely to face rising losses on loans to mining, tourism, property and retail businesses as the economy slows, Fitch Ratings said today.

    While Australian banks were proving “resilient” to the global credit crisis, the “exposure to corporate debt and commercial property” was of concern, the London-based ratings company said in a briefing.

    Fitch said it expects Australian house prices to fall this year, with areas linked to the resources slowdown most affected.

    “Our main concern in the current environment is the major banks exposure to single large names and commercial property,” said Fitch director John Miles. “Failures are difficult to perceive but their impact can be material. If a number of these large exposures were to fail at or around the same time, it could have a significant impact on earnings.”

    Moodys Investors Service said last week that it will review Australian banks credit ratings as the nation’s economy deteriorates more than previously forecast.

  11. Reb and N’

    The other issue is the level of wealth destruction that’s occurred on the stock market. It’s truly unbelievable how many billions have been lost by ordinary Australian’s with no real end in sight. Take today as an example:

    Sharemarket falls on profit reports, Citigroup fears
    http://www.theaustralian.news.com.au/business/story/0,28124,25094621-643,00.html
    AUSTRALIAN shares closed within a whisker of a new five-year low today after big falls in US and European markets.

    Disappointing earnings results, sharp falls in base-metals prices and renewed concerns about global banks weighed on shares.

    The S&P/ASX 200 fell 51.2 points, or 1.5 per cent, to 3351.2, the lowest close since January 23, when the benchmark index finished at 3342.7.

    The broader All Ordinaries lost 48.9 points to 3304.1. ”

    And to think it wasn’t that long ago when the benchmark almost reached 7,000.

  12. John – “on average Australian households have $160 in debt for every $100 they earn.

    Does this include superannuation?

  13. Tom

    Disposable income I’m sure Tom. In fact Ross Gittins wrote reecently:

    “Our households, in the past decade of the housing boom – including the welter of negative gearing – has seen their total debt double relative to their disposable income from 80 per cent to almost 160 per cent.

    That’s our great vulnerability. If Australia succumbs to the global recession, excessive household borrowing will be the greatest reason.”

  14. Sorry Tom, to answer your question the calculation is based on net income. The amount of income left to an individual after taxes have been paid, available for spending and saving.

  15. John, you don’t think then that the raw data illustrates an unnecessarily gloomy picture of the Australian savings record?

  16. To the contrary Tom I certainly do simply because so many of us have purchased for so long beyond our means. We got lulled into a false sense of security thinking our prosperity would never end.

    One other point that’s become obvious to me is that the easy access to credit for many low income earners has created and environment where those who are least able to afford it feel pressured into using credit in order to keep up with the Jones’ .

    I guess this is what JWH was referring to when he said ‘We never had it better’ under his government. We know now that that was an illusion.

  17. The sad reality for many is there’s every possibility now that we will see an acceleration of foreclosures similar to what’s been happening in the US and the UK, in my opinion.

    Increased living costs, the rising threat of unemployment, tighter credit conditions and rising interest rates due to increased inflation are all distinct possibilities.

    Head Residex statistician John Edwards just last year said housing affordability was at its lowest.

    “Distressed sales are everywhere now,” he said. “The decay is making its way into the middle- and upper-income areas as well.”

    Mr Edwards calculated that it takes 53.5 per cent of the average gross take-home wage to pay off a home loan and 37 per cent of the average gross take-home wage to pay off a unit.

    “Australian families are carrying about as much debt as they can handle,” Mr Edwards said

  18. Well, I’m a little more pragmatic and non-scientific in the way I judge the Housing market.

    I reckon the health of the market is directly inversely proportional to the number of fliers you get shoved into your letter-box from dodgy Real Estate Agents seeking to sell your house.

    The reasoning behind this is simple: The better the state of the market, the less touting they have to do for business.

    And right now my letter box is positively brimming with glossy Real Estate fliers from one sleazy git after another.

    Fair dinkum, why do these guys insist on putting their mug-shots on their fliers? It doesn’t help them attract business, that’s for sure.

    How can it, when the poor bastard looks like a cross between Terry Thomas (the gap-toothed crook from those old Ealing Comedies) and Eli Wallach of Spaghetti Western fame? I swear, the only thing missing is the gold tooth.

    A word of advice, Fellas: Lose the piccies if you want to drum-up business.

  19. Evan

    “Well, I’m a little more pragmatic and non-scientific in the way I judge the Housing market.

    I reckon the health of the market is directly inversely proportional to the number of fliers you get shoved into your letter-box from dodgy Real Estate Agents seeking to sell your house.

    The reasoning behind this is simple: The better the state of the market, the less touting they have to do for business.

    And right now my letter box is positively brimming with glossy Real Estate fliers from one sleazy git after another. ”

    Lol excellent indicator. Another is ‘real estate agents’ in the media trying to talk the market up. There’s been plenty of that as well.

  20. Bad news emerging which indicates real problems for the housing market ahead.

    $8b bid to boost loans a fizzer
    * Jessica Irvine Economics Writer
    http://www.smh.com.au/national/8b-bid-to-boost-loans-a-fizzer-20090223-8ft3.html?page=-1

    HOMEOWNERS could pay the price of less competition in the home lending market because the Federal Government’s $8 billion effort to boost confidence in the frozen market where non-banks raise funds has had limited effect.

  21. Reb

    There’s a fair degree of desperation in the air which is to be expected, I suppose. The bottom is dropping out of the top and and now there’s a real concern the arse is going to fall out of the bottom end. Take away the first homeowners grants and tighter lending conditions and the arse is likely to fall rapidly out of the entire market.

    Calls for extended home grant
    http://www.news.com.au/dailytelegraph/story/0,22049,25058684-5013110,00.html
    By Pamela Koh
    February 16, 2009 12:00am

    POSITIVE results since the first-home owners boost came into effect last October have industry groups lobbying the Federal Government for an extension.

    To date, only contracts entered into between October 14, 2008 and June 30, 2009 are eligible for the boost. However, the latest data from the Australian Bureau of Statistics showed a steep jump in the number of people borrowing either to buy or build a house.

    “The positive performance for December across every housing loan category deserves a loud round of applause,” Mortgage Choice managing director Paul Lahiff said.”

  22. This Commonwealth Bank is really starting to get up my nose (and I’m sure the other three are right behind them!) but they seem to be perpetuating the financial problems rather than helping to smooth them out…

    Houses for sale have increased around our suburb.

    ++++++++++++++++++++++++++++++
    Was at two different shopping centres yesterday (The Minister needs some formal wear for the weekend) and both were very quiet – I asked at a number of shops if business was slower than usual, all said yes (most “dead”). I thought it might just be ’cause it was Monday…one owner said she thought it would pick up when people started getting “the package” – short term I’m afraid…

    The lull before the storm – its shaping up for an awful year – and retail prices aren’t going down yet either, false sense of “normality”…

    …I just want to get it over with and these short term injections of cash are just delaying the inevitable, I’m afraid…sounds terrible when I read it but the truth is the truth…we won’t avoid it – its rumbling over Asia right now…heading our way.

    Lot of adult studying happening in my family – son, s/in-law, g/son. The wives are well qualified (sign of the times, hey?)

  23. TB

    I am afraid that you (and John) might be right. It’s gonna get very bad very soon. I am going to have to take in a lodger to help pay the mortgage as I think that I will need a buffer for the bad times.

  24. Joni..a female who can iron? If it’s any consolation hubby phoned from work this morning to say that he is going to be laid off on Friday. Perhaps we could take you and C’ in as lodgers? 🙂

  25. joni, on February 24th, 2009 at 9:30 am

    joni, it may easily just pass you by…most people will still be employed, most businesses will survive (the small retail, and “trade” are most at risk)…

    The recession 1991/92 about 11% were unemployed that means 89% were still employed.

    I started my business in 1992 – in the middle of the recession…we flew!

    This one is a bit different…bigger…but the principles are the same…

    Some people are make outrageous “positive” statements – Just reading an article and a a CEO of a recruitment agrency states that he has 800 clients and none of them were planning on retrenching staff…800 clients and “none of them” – as if he would know…

    I guesstimate this lot has another 18 months to 2 years to run – hate to quote PJK but…” THIS is the recession we HAD to have…”

  26. Min

    Sad to hear – anything on the horizon for him?

  27. TB

    “The lull before the storm – its shaping up for an awful year – and retail prices aren’t going down yet either, false sense of “normality”…

    …I just want to get it over with and these short term injections of cash are just delaying the inevitable, I’m afraid…sounds terrible when I read it but the truth is the truth…we won’t avoid it – its rumbling over Asia right now…heading our way.

    I guesstimate this lot has another 18 months to 2 years to run – hate to quote PJK but…” THIS is the recession we HAD to have…”

    It seems everywhere you look now the signs of deterioration are there TB.

  28. Hi TB and thank you for asking. There is the desal down in Sydney and a shutdown in a couple of weeks. However, not much else happening.

  29. Min

    That’s not good… hope he finds something soon.

    And yeah – maybe we will end up lodgers with you 😉

  30. TB:

    “The Minister needs some formal wear for the weekend..I asked at a number of shops if business was slower than usual, all said yes (most “dead”). I thought it might just be ’cause it was Monday ”

    TB, it might be because the “formal wear” department at Best & Less and Lowes is bound to be a little on the quiet side. It might be a bit busier at David Jones…

    🙂

  31. Min,

    Sorry to hear about your hubby being laid off work. Not good….

    😦

  32. Min

    I’ll send you an email (then you have mine).

    Sydney is a bit like the snake in snakes and ladders for you guys!

    I’ve read enough of your posts to know you and your husband are survivors!

  33. Min

    I skim too often and skip over bits I ought not to skim. My sincere apologies, you’re a wonderful contributor and a very thoughtful person and my thoughts go out to you and your husband. Job loss is never easy.

    It’s at times like this when reality really hits home.

    I think TB’s right when he says “I’ve read enough of your posts to know you and your husband are survivors!”

    John Mc

  34. reb, on February 24th, 2009 at 10:24 am

    Now, now, sreb, this is The Minister, we are talking about, I don’t mind me, but not my better half, please, slap!

    You’ve got a bit frisky since the Lordship thing, and others helping you to “gang” up on me!

    Might need to put you on a chain and choker – s#!t that’s probably fun for you! 😈

    ++++++++++++++++++++++++++++
    Min – email on way!

  35. TB

    Point taken! No offence (to the Minister) intended.

    I offer my sincere and humble apologies…

    🙂

  36. Thank you to all. We were hoping that the job would hang on until Easter as then J would get 2 weeks in lieu..sadly not so.

    Ok..now I do need help! How to keep hubby occupied for the next X time until he gets a new job..and nooo, I can’t do THAT all day!

    Thank you once again..(dare I say it) hugs MinXX

  37. TB..thank you so much for writing. I have replied from our family address.

  38. Min

    I echo the others responses and hope your hubby finds something quickly. I have been quite quiet and for no other reason than terribly busy. Have looked at some blogs and responses, however seem to be lacking the time to join the debates as much at the moment. ( Probably make some smile 🙂 ). I am still here just in the background guys.

  39. Shane

    But please fill us in quickly on the “Life of Riley”.

  40. No probs Shane. I’ve been thinking of you since you mentioned about associates/clients with cancer.

  41. “Sorry to hear about your hubby being laid off work.”

    Same here Min. But I’m sure brighter days ahead. Sometimes abrupt changes in life can bring a whole new perspective and path that brings out the best in you…and opens a door to improvements in lifestyle. Happened to me on more than a few occasions. The transformation can initially be a bit of a struggle…but if your the sensible, pragmatic, diverse thinking type of person as you appear to be, your probably well prepared.

    During this economic malaise I’m glad we have a Federal government that is beginning to listen to the workers. Rather than just the top-end-of-town. The initial tax cuts…& now the focus on affordable health incl. dental services, pension increases, education revolution…as opposed to just pushing people into debt traps w/ heaps of kids & unaffordable homes. I don’t think it will hurt to have the banks requiring deposit on top of the First Home Owner’s Scheme at this juncture…the four pillars need to be secure…as do the community financial institutions.

    But I do agree that the Commonwealth bank is irritating due to the pain it has brought on itself by some poor decisions in the past decade or so. And a couple of the other banks are not exempt from dumb actions. Still, I’d rather be here than in the UK, America and such right now. Aussies are a tough, pragmatic people under pressure…most know how to adapt…use diverse skills during economic transition periods.

    Provided the Labor Party provides adequate training/retraining facilities…affordable higher education (w/ a focus on balancing specialisation w/ knowledge acquisition & social adaptation skills)…

    and provides enuff flexibility for small business types…provides rural towns w/ decent communication infrastructure and healthcare services & HOME self-sufficiency opportunities w/out breaking the bank…

    and puts appropriate funds into researching and establishing new (sometimes old ways that worked but were bulldozed over are good too), vital and environmentally sustainable industries & practices…

    widens funding to take in various entertainment & art & artisan sectors that assist in creating a wider career base, whilst widening ithe interests of the general public & in turn accomodating diversity & promoting eventual self-sutainability…

    and safety nets are used in the process to bounce people safely into much of the above rather than just welfare dependency…

    then I reckon things will work out just fine…after some initial pain & readjustment.

    And yes joni, lodgers and such are a good idea in harder economic times.

    And TB is correct…some businesses do just fine out of recessions…and some even partially survive on government payments that motivate individuals to work and businesses to take them on rather than the individual just sitting on the dole. Tho some businesses will exploit such supportive payments if there is a slack follow up system by government.

    I reckon the downturn could last between 5-7 years…and requires governments grabbing hold of visionary ideas and w/ the help of education, so,me business characters & a more balanced media, steering public opinion so that they see the common-sense in gradually shifting away from overly-toxic, archaic industries & “stick in the mud” approaches that will not provide the Nation’s children & guardians/carers w/ the health, security & intrinsic motivation they require.

    Economic downturns can provide enormous opportunities for rethinking our pathways (gawd knows we need to)…and rearranging our lifestyles for the better. To escape the CAGE of rampant consumerism and time restrictions that deny many of the opportunity to utilise their talents…& spend quality time w/ their friends & family.

    Humanity has always ADAPTED.

    Let’s not take the short cut to war…but think & work hard to create a more enjoyable, sustainable lifestyle that demonstrates the RESPECT necessary for our volatile, yet life providing environment.

    OUR HOME. EARTH.

    Cheers
    N’

  42. joni and min

    Riley is ok, but seemed a little off yesterday, we all have those days.

    Clients with cancer is very depressing. Our young mother is still hanging on, she was expected to pass away last week and is simply hanging on by a thread.

    Male customer apparently has 6 months approx to live, so I am working on trying to assist them so that he can relax knowing that the business they wanted to buy is in their names and he can pass away with confidence of the future for his wife and their young son.

  43. Thank you N’…yes about to put a concerted effort into the vegie garden. So far only butternut punkin’, passionfruit, lemon and lime trees, parsley and spring onion. Oh yes and Jeff’s newly planted avocado. And double oh yes, and my newly planted rows of lilly pilly. Can’t wait to start jam making again.

    Next is a new rosemary (who curled her little toes up when we moved from Billinudgel) and mint and basil, oregano and thyme.

    During hard times previously I used to work the markets Byron, The Channon, Brunswick Heads and Bangalow as a leadlighter. It’s a matter of using one’s imagination. When I think about it..those were good times..camel rides for the kids at Bangalow and wonderful friends.

  44. reb, on February 24th, 2009 at 10:47 am

    sreb, none taken – I think I know you reasonably well by now and know none was intended…I do get a bit defensive when it comes to The Minister…

    _____________________________________
    N’ Let’s not take the short cut to war…

    That little thought has crossed my mind more than once, (one of my hobbies is military history – and it does tend to repeat itself too often…)…

    Speaking of which we are just getting ready to go to the cinema (much nicer word than movies) to see Valkyrie – that’s VAL – KY (as in high) RIE (as in ree) – bloody septic tanks!

    (Tightarse Tuesday! – half price)

  45. Shane..kelpie was also off her tucker yesterday, maybe the phases of the moon??

    What a difficult job you have.

    Just thought to pass this along. When Dad was at Caritas Christi the counsellor recommended talking about the past. This to me was contra to my feelings and that it might cause upset. However the wonderful Shirley was right.

  46. ”Malcolm might happily forget that while his former government colleagues were steering the good ship Australia, the nation’s total debt soared from a mere $700 billion in 1997 up to $3.2 trillion by the close of their term. An increase of 387%”.

    A good point John and one worth making to the RWDBs here as they seem to have been taken in by the Libs smoke and mirrors act.

    Neil of Sydney says he doesn’t talk about it ‘cos he “doesn’t understand private debt”! Well he seems to understand more complex Liberal Party propaganda just fine, I would suggest he doesn’t ‘like’ to talk about how quickly under Howard/Costello public debt has been transformed into private debt.

    What’s hard to understand about people being told by the Libs that ‘they’ve never had it so good’ and ‘the good times are here to stay, yes you might have debt but you have great assets, we’ll even throw in home owner’s grants’ (for the wealthy to buy houses in their kids names etc.)?

    What’s hard to understand about privatisation – the selling of the assets of the nation, bought with taxpayer’s money back to the taxpayer?

    What’s hard to understand about the insidious PPP’s?
    PPP’s cover health, education, defence, transport, information technology, environmental protection and public buildings. Investment banks push PPP’s.

    (The Greens) – …We don’t believe private capital, motivated by profit, can be relied on to deliver the best outcome for society at large.
    · PPPs are more insidious than privatisation. To join a PPP, a government department must fundamentally reorganise how it thinks and works.
    · PPPs force public servants to think like private companies – and that is a dangerous trend.
    · While the public sector agencies still exist, PPPs shift the culture and values of those agencies towards a financial, bottom-line focus.
    · And too often, PPPs deliver profits and benefits to companies while leaving risks and losses with the taxpayer.
    .The losers are those who end up with lower-quality services that cost more.

    That’s because PPPs suffer from escalating costs, high consultancy fees, they’re secretive and they cost more to consumers.
    · Open government is also a loser, since PPPs are often covered by ‘commercial-in-confidence’ protections.
    · The public service is a loser, as talented bureaucrats are lured to the private sector for higher pay.

  47. Oops, a bit lengthy there, sorry!

  48. Kitty

    “Neil of Sydney says he doesn’t talk about it ‘cos he “doesn’t understand private debt”! Well he seems to understand more complex Liberal Party propaganda just fine, I would suggest he doesn’t ‘like’ to talk about how quickly under Howard/Costello public debt has been transformed into private debt.”

    He needs to have a much better understanding of TOTAL DEBT and not just SELECTED government debt to be able to argue the merits of the Howard Government’s record for sure.

    PPP’s are an interesting one. NSW’s harbour tunnel etc are great examples of taxpayers being screwed simply because the government fancied themselves as businessmen. Politician’s in general have no idea how the private sector really operates and tend to dive in head first in order to impress voters.

    It would be bad business not to cover yourself especially when dealing with the government – and the government walk constantly into traps set by the canny profit making machines.

  49. Just a mention from the link: PROPERTY: Sales dry up unless price is right

    It also states: “The market for properties in the under-$400,000 price bracket is very strong at the moment.”

    A conclusion could be that 1st home buyers are now aiming at the lower end of the market instead of at the upper end of the market. And this of course is what should have been happening in the past, but didn’t.

  50. “yes about to put a concerted effort into the vegie garden. So far only butternut punkin’, passionfruit, lemon and lime trees, parsley and spring onion. ”

    Min, it all sounds fantastic. I must put in a lemon bush…any recommendations? Gawd I luv homemade jam…& homemade fruit/vege wines for that matter.

    Dya remember this show?:

    http://www.bbc.co.uk/comedy/goodlife/index.shtml

    N’

  51. “That little thought has crossed my mind more than once, (one of my hobbies is military history – and it does tend to repeat itself too often…)…”

    Too true…I was thinking post-Depression…Roosevelt & such. Not the way I prefer to use large manufacturing outfits, railways, ships & ports.

    Well said kittylitter. You are a lioness.

    shaneinqld, good work

    N’

  52. MIn, I’m so sorry to read the news about your husband losing his job. Will you be able to get some dole money to keep body and soul together while he looks for more work?

    Apparently, the government has lowered the savings threshold for the next 2 years, I read somewhere, but can’t remember whether it was in the paper or on blogocrats.

    I think it’s a disgrace that people have to get rid of every hard-earned penny in savings and wait 8 weeks to be assisted!

    I have never liked the requirement to get rid of all one’s savings to be eligible for unemployment benefits. That money should be a fall-back for things like car repairs etc.

    I’m not saying that people with vast amounts of savings should be eligible, but I think it would be fair to allow people to keep up to $10,000 of just-in-case money. Bad enough to lose your job, let alone forced to become a pauper!

    Back on topic after a little rant, my daughter’s in the real estate game. She does quarterly inspections on rental properties and is feeling a little vulnerable. I reckon she should be relatively safe, though, because people always need somewhere to live and in uncertain times, renting may be the best option.

    She is a renter and has until recently been adamant that she’s not interested in owning any property. Until the front unit in her block went on the market last week for around $220k, that is. I haven’t shared this with the husbandy substance; his cholesterol and diabetes are under enough pressure.

    She would like us to finance her, but with current conditions, I had to disabuse her. If it was a lot cheaper and if the cray industry and the world economy was looking a lot healthier, I’d possibly jump in. But big debt for modest incomes is too scary right now.

    Once again, Min, I’ve got everything crossed for you and you hubby.

  53. N’ being later from Mt Evelyn Vic, I resent having to pay for a lemon. Jeff’s granny Coloretti at Bundoora had a huge tree that kept all of the family in lemons for at least 2 decades. And Mum in Hawthorn is still managing to keep the old lemon tree going in spite of the drought..she’s lost most of her other plants.

    Likewise my mother kept the whole family in home made plum jam (blood plumbs) for over 3 decades. Sadly the old plum tree gave up the ghost not long before my dad passed away.

    I am currently doing cuttings of kalanchoe for people in drought and other areas to post off as soon as they get some rain.

    Recommendation is mulch. The one we have is a lemonade tree and so far have had borers and now leaf curl. Poor lemon tree, it had to be cut back by 1/3..but for lemons it’s worth the effort.

    But re lemons you can’t do better than Burt Munro..uric acid ie one must enlist help of the blokes. And a plug for hubby’s favorite movie.. http://www.youtube.com/watch?v=Erp6kvIrxIw

  54. Jane..thank you for asking. The current thing is that one has to run one’s savings down to the bone before being able to obtain the pittance which is the dole…which you have noted.

    We did this once about 8 years ago..then hubby got a job and we ended up having to spend the following 3 years trying to pay back the 8 weeks that we were on the dole. Plus youngest also lost her Austudy because of hubby obtaining employment.. It’s just a nightmare and I would rather than we spend all of our super rather than having to go onto the dole.

    However, and fortunately there is just the 2 of us, all 3 kids now being independent. Eldest working, son in the Navy up in Cairns and youngest on a PhD scholarship at UQ.

    I relate..hubby has post polio syndrome.

  55. “Recommendation is mulch. The one we have is a lemonade tree and so far have had borers and now leaf curl. Poor lemon tree, it had to be cut back by 1/3..but for lemons it’s worth the effort.
    But re lemons you can’t do better than Burt Munro”

    Thanx for the feedback Min. Will come in mighty handy.

    Must run. Gotta grab food for S’s birthday meal.
    N’

  56. Min,

    My daughter has just planted a chocolate pudding tree (among others) – we now have two(!) bunches of bananas waiting for the third…and the dwarf avacado tree has suddenly taken off…

    Oops! Wrong thread…

  57. It will do TB. Our banana has taken off too.

    N’..if you don’t know how to piddle on a lemon tree, then t’is about time that you learned it.

  58. N’ legs apart and standing up is best…

  59. Thank you TB, I was trying to be sub’tl re the Burt Munro reference. Must definitely now must choof.

  60. “N’ legs apart and standing up is best…”

    no problemo, I used to write my name in the snow…:)

    Thnx for suggestions TB…& Min. interesting your family backround is similar. Italian mayor, cool…I hope he spread the good word about their scrumptious food.

    N’

  61. Min, It’s a bloody disgrace! First making you spend your nest egg, then grinding your face in the dirt having to pay back what you were entitled to in the first place.

    I had hoped the Rudd government would ease the requirements a bit more and allow people to keep savings up to $10,000, so they’d have something behind them. It hurts that they’re also hell-bent on punishing the unemployed.

  62. The fall in US housing prices continues its sickening fall without an end in sight it seems. It also shows the impact consumer spending has on the overall health of the economy. Two-thirds of the US economy is driven by it. I’d suggest that own economy has a similar make-up.

    US house prices fall at record pace
    http://www.theaustralian.news.com.au/story/0,25197,25104102-12377,00.html
    US home prices plunged at a record pace in December and consumer confidence hit a new low in February, data showed overnight, as Federal Reserve Chairman Ben Bernanke warned the recession could extend beyond this year.

    The Conference Board, an industry group, said its consumer confidence index fell to 25.0 in February, the lowest since the index began in 1967, from 34.7 in January.

    Consumers’ outlook showed no sign of turning around, according to the report, boding ill for the consumer spending that drives some two-thirds of the US economy.

  63. jane, on February 25th, 2009 at 12:35 am

    jane, I thought Rudd had allocated a further $300 million for cross training and development with the expected rise in unemployment?

    (Compare that to the $3 billion allocated to the launch of the National Training System in 1992…by PJK)

    ++++++++++++++++++++++++++++++++

    Out to the movies yesterday and clothes shopping withThe Minister (one of the largest shopping centres in Oz ) all staff I spoke to said it was quiet and some had noticed more than usual vacant car spaces.

    Enjoyed Valkyrie…3 out of 5

    ++++++++++++++++++++++++++++++++

    sreb, you’ll be pleased to know that …I…selected the final choice of top & jacket ensemble for TM, while she was in the change rooms – staff were “stunned”, and one said so! Apparently “men don’t do that”…

    …Oh! yes we do…

    You’ll also be excited about the fact that it was purchased in your beloved David Jones…

  64. Gasp! David Jones?!

    I’m impressed TB.

    You mentioned that the staff were “stunned”.

    Was that “stunned” in a good way, or “stunned” as in “shocked n stunned” like by a taser gun?

    I watched “Rose & Malonie” on the box last night. Quite a good BBC police drama.

    Rose is an alcoholic slut.

    Oddly, I find her quite easy to relate to.

  65. John

    BIS Shrapnel this morning were forecasting a recovery and strong growth in Australian Housing prices in the next 4 years.

  66. Shane

    The very same BIS Shrapnel that predicted a 40% rise in housing prices just 2 years ago?

  67. Shane

    I’ll strip butt naked and run down Pitt St in peak hour if housing prices advance more than 5% from their peaks in recent years (wink). It defies logic, in my opinion. Especially, given that affordability will be an issue for some time to come.

    Rising unemployment means future wage increases slim, say economists
    http://www.theaustralian.news.com.au/story/0,25197,25104433-12377,00.html

    WAGES grew at the fastest pace in 10 years in 2008 but the spectre of rising unemployment should curb big increases in pay in the future, economists say.

    Total hourly rates of pay, excluding bonuses, rose 1.2 per cent in the December quarter, seasonally adjusted, the Australian Bureau of Statistics (ABS) said.

    The result was above market expectations of a 0.9 per cent increase.

    The wage price index rose 4.3 per cent from a year earlier, the fastest growth in annual wages growth since the data series started in 1997.

    Commonwealth Bank of Australia senior economist, Michael Workman, said the latest data reflected a tight employment market in 2008, before the impact of the economic slowdown took effect.

  68. Shane

    I really wonder sometimes where BIS get their reasoning from. Peter Hartcher’s latest article brings home the seriousness of what lies ahead. Also, Pacific Brand 1850 jobs to go as clothing maker pulls out of Australia. Which is most certainly a nail in the coffin of Australian manufacturing.

    Sink or swim in sea of trouble
    http://www.smh.com.au/national/sink-or-swim-in-sea-of-trouble-20090224-8guj.html
    “Next time you’re on the way to work on a bus that’s starting to fill up with commuters, or anywhere else with 30 people or so, look around. One of you will lose your job in the next 16 months.

    That’s the official Treasury forecast – 300,000 full-time workers, or one in 30, will be thrown out of work as the downturn bites.

    If this proves accurate, the total number of Australians to lose their jobs after the peak in employment in February last year will be 405,000, or about one in 25.

    This will burden the country with a wave of hardship Australia has not seen since the recession 17 years ago – so long ago that half the population has no adult experience of a downturn.

    Shares have lost half their value already. One small business in every nine is at high risk of failure, the consultancy Dun and Bradstreet says.”

  69. aah Trusty John…

    ever reliable for trumping images of impending doom and armageddon!!

    What about the Motor vehicle industry John? You’ve neglected that little gem..

    – Nissan has announced plans to cut its Sunderland workforce by 1,200.

    Thousands of unsold cars are stored around the factory’s test track. Honda is halting production at its Swindon plant in April and May, extending the two-month closure announced before Christmas to four months. Honda and Japanese rival Toyota are both cutting production in Japan and elsewhere.

    – Earlier this week Jaguar Land Rover said 450 British jobs would go. New Jaguars awaiting delivery

    -With many manufacturers on extended Christmas shutdown, the number of cars rolling off production lines in December fell 47.5% to just 53,823

    Thousands of new cars are stored on the runway at the disused Upper Heyford airbase near Bicester, Oxfordshire, on December 18, 2008.

    Sales of new cars in the UK have slumped to a 12-year-low and production of cars at Honda in Swindon has been halted for a unprecedented four-month period because of the collapse in global sales and represents the longest continuous halt in production at any UK car plant. Unsold new cars pile up at Swindon

    The announcement comes on a day when the EU’s Industry Commissioner Guenter Verheugen warned the outlook for the European car industry was ‘brutal’ and predicted not all European manufacturers would survive the crisis.

    Build up of new cars awaiting delivery

    Imported cars await delivery at Shearness

    Unsold new cars sit at Avonmouth

  70. Ahh reb, why do I get the impression that you’ve been reading about Minsky and his financial instability hypothesis?

    Everything’s crashing at the same time reb, I can’t keep up, and it seems the old ‘easy credit’ is still the preferred model of doing business.

    Offers of easy credit are bad news for the poor
    * Chris Bowen
    http://www.smh.com.au/opinion/offers-of-easy-credit-are-bad-news-for-the-poor-20090224-8gsy.html
    It’s “No credit check month” at Radio Rentals. If you go to its website, the first thing that greets you is a big sign assuring customers that they can apply for the lease of a plasma television, fitness equipment or “computers plus more” without having their credit record checked.

    The company claims this isn’t being irresponsible. What garbage.

    Anybody who claims that this sort of behaviour is responsible or ethical is talking absolute twaddle. It is subprime greed writ small.

    The irresponsibility of lending money without proper credit checks is underlined by the fact that other financial institutions have argued that the Federal Government should make more information on personal credit histories available to enable them to be more responsible lenders.

    The sad thing is that “No credit check month” is not a one-off. It is a symptom of a wider problem, stretching beyond just one company. It represents a business model which is predicated on maximising profit by appealing to those doing it tough, that just a bit more debt might be the gateway to the good life.”

  71. John McPhilbin, on February 25th, 2009 at 12:26 pm Said:

    Shane

    The very same BIS Shrapnel that predicted a 40% rise in housing prices just 2 years ago?”

    Come on Shane, you’re supposed to say that stripping butt naked and running down a crowded Pitt St ‘ will not be necessary etc

  72. TB, I don’t know, but it’s possible that amount has been allocated. I’ll have to trawl around. Thanx for telling me.

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