House prices
That above Mark Buigoss article is interesting VJ. I’ve got no idea how this stuff works so I can’t tell if it’s a biased piece or he is just simply stating the facts that he has?
A question I have is - With all the interest rate rises. Who does it effect? I thought it’s the people at the bottom? Prices go up so each person down the line ups theirs to cover the hikes. Lower people wear the brunt of it. Which leads me to guess that’s how they curb inflation so the lower people aka majority stop spending?
There's a bit of that Nick, for sure. For example, investors with tenants will pass the cost on and the tenants get squeezed. Middle class with large mortgages will feel it as soon as banks transmit it - but they can shop around too.
One other effect might be currency - if the AUD falls as our interest rates are not seen as high as what is required/or other nations/ or inflation - everything we import, which is a huge amount of consumption - goes up in price and gets transmitted to everybody. Eg fuel, most of our fuel is now refined in Singapore and we only have 2 refineries left operating in Australia.
Also the inflation itself gets the savers: if you get 4% on your term deposit or savings account, but food inflation is running higher than the official 5.4%, then you are going backward into poverty as each year passes.
This was why the IMF had a shot at the government last week, they pointed out the 4.1% was quite away below the 5.4% inflation, so a negative real rate. They suggested the government delay/cancel some of the big (paying, and costing) infrastructure jobs to reduce the inflation.
Edit: I'd think if Mark has biases, it would be toward Australians being able to take out mortgages and continue to do so into the future without severe pain. He notes the increase in demand posed by the unnaturally large immigration flows, bumping prices higher which makes it harder to service mortgages, amongst other things.
I don’t think Mark’s article has much bias in it. This stuff is well documented and same issues were raised by others. Anyone with solid understanding of economics and supply/demand modelling would come to the same conclusions.
Whilst I believe the stats will point that another rate rise in Dec is on the cards I think the RBA will be under pressure to hold off increasing in Dec as an early Xmas present to struggling Aussies.
I'm no economist but do run my own small business, so have some knowledge. To me Mark Bouris makes a ton of sense.
In what way mate?
When Bouris talks about expenditure with regards to a rapidly increasing population, I've seen elsewhere that, yet again, we'd be in a recession if it wasn't for that.
So yes, it might seem that generally speaking everything looks ok, but in reality people are really hurting.
At the same time, unencumbered boomers and kids who are spending big on cafes, travel and cars won't be affected by interest rate rises.
Again, interest rates quickly look like a very blunt tool with which to control inflation.
Nick Bone wrote:Which leads me to guess that’s how they curb inflation so the lower people aka majority stop spending?
The RBA's approach to fixing inflation is by forcing people to spend less by ensuring high interest rates mean people have no money for spending. That's generally poorer people who were barely making ends meet as it is, and renters who are at the mercy of landlords in terms of rental increases. The wealthy barely contribute to addressing inflation, but do contribute to worsening it. I can't find it now but a few weeks ago I saw a breakdown by age on spending, and basically those under 40 have cut back spending over the last 2 years but boomers have been increasing spending. Obviously that's a blunt measurement given that there's rich young people and a shitload of poor old people, but the trend is there.
The RBA are also big believers in Non-Accelerating Inflation Rate of Unemployment, which is a dumb theory that basically requires enough people to be suffering in unemployment for the good of the broader economy. Again, it is generally poorer people that bare all the impacts of addressing inflation. The RBA thinks the unemployment rate should be at about 4.5% and it is currently 3.6%, so in essence the RBA wants an extra 100 000 to lose their jobs. Stings a bit when the head of the RBA makes a million bucks a year.
velocityjohnno wrote:https://www.news.com.au/finance/economy/australian-economy/ive-never-see...
Agree on cutting immigration, taxes such as stamp duty and pretty much the rest, except Superannuation.
That has been designed for retirement and will kick another can of problems down the road.
Universities should never have been put in the position that they need foreign students to pay full fees to run.
Anyway Neo -liberalism is starting to bear its sour fruits.
AndyM wrote:In what way mate?
When Bouris talks about expenditure with regards to a rapidly increasing population, I've seen elsewhere that, yet again, we'd be in a recession if it wasn't for that.
So yes, it might seem that generally speaking everything looks ok, but in reality people are really hurting.
At the same time, unencumbered boomers and kids who are spending big on cafes, travel and cars won't be affected by interest rate rises.
Again, interest rates quickly look like a very blunt tool with which to control inflation.
It's a blunt tool but RBA doesn't have many tools. There is this perception out there that RBA is the only party fighting against inflation. But in reality, a government (both this and ex) has at least an equal role to play through its fiscal policy and other supply/demand drivers.
andy-mac wrote:velocityjohnno wrote:https://www.news.com.au/finance/economy/australian-economy/ive-never-see...
Agree on cutting immigration, taxes such as stamp duty and pretty much the rest, except Superannuation.
That has been designed for retirement and will kick another can of problems down the road.
Universities should never have been put in the position that they need foreign students to pay full fees to run.
Anyway Neo -liberalism is starting to bear its sour fruits.
Andy, I agree on super. It's a controversial one. Unis are out of control. The fees they charge are astronomical. And they're even higher for foreign students. There is no reason to charge that much for education.
dandandan wrote:Nick Bone wrote:Which leads me to guess that’s how they curb inflation so the lower people aka majority stop spending?
The RBA's approach to fixing inflation is by forcing people to spend less by ensuring high interest rates mean people have no money for spending. That's generally poorer people who were barely making ends meet as it is, and renters who are at the mercy of landlords in terms of rental increases. The wealthy barely contribute to addressing inflation, but do contribute to worsening it. I can't find it now but a few weeks ago I saw a breakdown by age on spending, and basically those under 40 have cut back spending over the last 2 years but boomers have been increasing spending. Obviously that's a blunt measurement given that there's rich young people and a shitload of poor old people, but the trend is there.
The RBA are also big believers in Non-Accelerating Inflation Rate of Unemployment, which is a dumb theory that basically requires enough people to be suffering in unemployment for the good of the broader economy. Again, it is generally poorer people that bare all the impacts of addressing inflation. The RBA thinks the unemployment rate should be at about 4.5% and it is currently 3.6%, so in essence the RBA wants an extra 100 000 to lose their jobs. Stings a bit when the head of the RBA makes a million bucks a year.
Yes, exactly that. Forcing an unemployment is an insanity.
flollo wrote:AndyM wrote:In what way mate?
When Bouris talks about expenditure with regards to a rapidly increasing population, I've seen elsewhere that, yet again, we'd be in a recession if it wasn't for that.
So yes, it might seem that generally speaking everything looks ok, but in reality people are really hurting.
At the same time, unencumbered boomers and kids who are spending big on cafes, travel and cars won't be affected by interest rate rises.
Again, interest rates quickly look like a very blunt tool with which to control inflation.It's a blunt tool but RBA doesn't have many tools. There is this perception out there that RBA is the only party fighting against inflation. But in reality, a government (both this and ex) has at least an equal role to play through its fiscal policy and other supply/demand drivers.
Agree.
It seems very politically convenient for the government of the day to make the RBA the whipping boy with regards to inflation and meanwhile the government does so much that works to the contrary.
A complex game of smoke and mirrors, of propaganda and serving the corporate masters.
Yeah, they ditched Philip Lowe because his rate rises were political poison and the new Governor has gone straight back to the same playbook.
Be much harder to get rid of her as a solution to the problem.
Agreed Flollo - there are a range of measures the government can take to reduce inflation AND they can can also intervene in decisions of the RBA. Like AndyM said, it's simply convenient for the government to pretend their hands are tied.
A government that markets itself on having a heart can't stand by while the RBA talks about making a further 100, 000 jobless, while big banks and supermarkets make record profits during a cost of living crisis, and still choose to leave the poorest Australians on welfare rates that are far below the poverty line. You'd expect that from the Libs and they wouldn't care when you called them out for it, but when Labor does it while also pretending to be progressive is infuriating.
Just saw that NAB announced a $7.7bn profit, up 8.8%. This after Westpac announced $7.2bn in profits, up 26% on last year. The Westpac CEO also said that he wants interest rates to go even higher, while also saying that in 29 years he'd never seen the banks balance sheets look as good as they do right now. Australians are being screwed.
I'll say it again.
The lies that Labor are "Left", and that we have a choice in Australian politics are extremely powerful and damaging.
And I don't think you even have to be a cynic to think that this is all carefully planned to extract maximum dollars from the most people.
Are franking credits (and other tax reforms) still a dirty word?
donweather wrote:Whilst I believe the stats will point that another rate rise in Dec is on the cards I think the RBA will be under pressure to hold off increasing in Dec as an early Xmas present to struggling Aussies.
Inflation has never been "cured" when interest rates are lower than the inflation rate..... I dont see the inflation rate dropping while we have such a poor exchange rate but who knows, maybe it can.
I don't think anything's changed with regards to franking credits, CGT and negative gearing since Labor lost the 2019 election largely due to their proposals re the above.
I mean, The Greens could propose any number of methods to address housing affordability issues, instead it puts forwards a ridiculous idea for rent freezes which doesn't have a hope in hell of attracting any real support, which to me shows what political poison tackling the core causes would be.
And/or it shows how mainstream The Greens really are.
Put another way, The Greens of all parties should be addressing the key drivers of housing unaffordability - high levels of population growth, policies that make housing an attractive investment, supply constraints etc etc.
In theory they state that "the government should scrap negative gearing and capital gains tax discounts and invest the extra revenue in building well designed public and community housing" but the only thing that makes the news is talk of rent freezes.
So that leave me with three conclusions.
1. The Greens are paying lip service to "progressive" policies and they're actually very much part of the status quo.
2. The reality is that the policies are total political poison.
3. The media is stitching them up with selective and biased reporting
freeride76 wrote:Yeah, they ditched Philip Lowe because his rate rises were political poison and the new Governor has gone straight back to the same playbook.
Be much harder to get rid of her as a solution to the problem.
You must admit it's a solid troll move.
It's an unequal mix of all three - and there's lots of tensions in the party over the more democratic socialist policies, even though they tend to be the things winning votes and building power at the moment. But as someone who was a campaign manager for them in the past, I'll say that the media stitching them up with selective and biased reporting is a huge issue.
For example, in Tassie the Greens have a policy of restating a government department of works who would be responsible for building public infrastructure, including housing, in the same way we did in the post war years. Public money being used to build publicly owned homes, providing good public sector jobs for workers. You'll never hear about it in the media though. Likewise nationally, the suite of policies that include grandfathering negative gearing, getting rid of CGT concessions, better rights for renters, huge growth in public housing builds, etc etc etc would all lead to a fundamentally different approach to housing in Australia, but journos can only ever seem to pick one of those at a time and talk about it in isolation (and usually centers on the rich person who might lose a little bit of money, not the person with no secure housing who might finally have some stability).
AndyM wrote:And I don't think you even have to be a cynic to think that this is all carefully planned to extract maximum dollars from the most people.
Has been since the Rum Corps AndyM.
monkeyboy wrote:donweather wrote:Whilst I believe the stats will point that another rate rise in Dec is on the cards I think the RBA will be under pressure to hold off increasing in Dec as an early Xmas present to struggling Aussies.
Inflation has never been "cured" when interest rates are lower than the inflation rate..... I dont see the inflation rate dropping while we have such a poor exchange rate but who knows, maybe it can.
Melbourne Institute runs their own inflation surveys to straddle ABS results, they had Sep at 5.7 (to ABS Oct at 5.4) then latest at 5.0 or so... iirc! So if correct, might suggest next ABS one will be down further? 70% off sale at local adultshop mentioned in other thread shows that demand is drooping.
Don’t forget the huge spending spree about to occur with Black Friday and cyber Monday sales. This won’t help the stats for reduced consumer spending in Nov.
velocityjohnno wrote:monkeyboy wrote:donweather wrote:Whilst I believe the stats will point that another rate rise in Dec is on the cards I think the RBA will be under pressure to hold off increasing in Dec as an early Xmas present to struggling Aussies.
Inflation has never been "cured" when interest rates are lower than the inflation rate..... I dont see the inflation rate dropping while we have such a poor exchange rate but who knows, maybe it can.
Melbourne Institute runs their own inflation surveys to straddle ABS results, they had Sep at 5.7 (to ABS Oct at 5.4) then latest at 5.0 or so... iirc! So if correct, might suggest next ABS one will be down further? 70% off sale at local adultshop mentioned in other thread shows that demand is drooping.
Boom tish!
I've never spent a cent on these Black Friday things- I always just assumed it was an American thing?
Has anyone spent something here?
freeride76 wrote:I've never spent a cent on these Black Friday things- I always just assumed it was an American thing?
Has anyone spent something here?
I'll spend big this year however, the goal is to achieve significant savings on the items that I have to buy regardless of Black Friday. These will be Christmas presents, I've got 2 birthdays for kids and anything from toilet paper to muesli bars to other random pantry items. There are good deals to be had and I exclusively shop online.
The reason it's big in America is because it is a discount day after Thanksgiving with still enough time to get the stuff before Christmas. It's actually a really good opportunity to nail the Christmas shopping at a discount. Similar to our Boxing Day sales but before Christmas.
Sweet, cheers Flollo.
Anyone near Macquarie Park? What is the area like - just commercial? What would this do to the area? Improve it?
https://www.smh.com.au/politics/nsw/plan-to-fit-3000-homes-between-two-m...
velocityjohnno wrote:Anyone near Macquarie Park? What is the area like - just commercial? What would this do to the area? Improve it?
https://www.smh.com.au/politics/nsw/plan-to-fit-3000-homes-between-two-m...
It's a good area with lots of jobs and good connections to other parts of the city. I agree with this development. The risk is that a bunch of these units could be bought by Asian migrants which wouldn't help with the housing crisis. That area is quite expensive and popular with Asians. Nearby Chatswood is the same. Can be very expensive there, I can't see these units providing many cheaper-end housing options (rent or buy).
So decent infill, a good planning move. You know they'll sell it to the highest bidder.
freeride76 wrote:I've never spent a cent on these Black Friday things- I always just assumed it was an American thing?
Has anyone spent something here?
It's crazy here now. Everyone hangs for them. I've bought quite a few things in the past.
Different topic - what’s going on here?
https://www.axios.com/2023/11/07/china-economy-negative-foreign-investme...
donweather wrote:freeride76 wrote:I've never spent a cent on these Black Friday things- I always just assumed it was an American thing?
Has anyone spent something here?
It's crazy here now. Everyone hangs for them. I've bought quite a few things in the past.
I'm out of the loop - are there actually significant bargains?
In the States, some of the sale prices were almost literally unbelievable.
Huge discounts, impossible to ignore.
Consumers are tapped out; the employment picture is deteriorating; and demand is clearly weakening.
Where could this be...
Lots of lags in interest rate impacts. 18 to 24 months is typical for full impact. Delayed by high immigration and in the US by big deficits stimulation etc.
In the end inflation usually breaks fully in recessions when unemployment finally surges.
RBA knows and wants this but can't say so.
Government wants the end result of lower inflation but wants to somehow skip the recession bit. Not real but makes it easier to talk positive.
Then when it happens, it can be blamed on someone else or overseas factors. The old line, "no one could have foreseen" will come out when something breaks.
Soft landing is the dream. But that almost never happens.
Lots of risk factors out there and delaying of the recession in the US by huge deficits - WWII level - may make it worse when it hits.
Policy tools to counter the recession in the US such as to run even bigger deficits or to cut rates are not available or will just add to problems.
Commentators often mention that a range of conditions building now have never been seen in that mix, scale and timing before.
Reagan ran deficits way back which were seen as scary back then. The US now has deficits so large that Reagan's seem like loose change.
Buckle up.
Or if you listen to Wall St, go all into stocks as the next bull market will somehow spring off the peak of the previous one. Like the pole vaulter grabbing a new larger pole in mid air to double their personal best by a miracle second pump mid jump.
US focussed. But flow on effects will come here. Tens of billions in loans extended and payment not required or made into 2nd mortgages during covid now requiring payments. Home loans, car loans, student loans - all extended - debt does not go away it grows.
?si=Zj-FCuNYTjlx1cTC Pretty much what has been said in this forum for quite some time around immigration and interest rate rises competing against one another.
https://www.thenewdaily.com.au/finance/2023/11/10/alan-kohler-the-rba-is...
Yeah, just read that Don.
frog wrote:US focussed. But flow on effects will come here. Tens of billions in loans extended and payment not required or made into 2nd mortgages during covid now requiring payments. Home loans, car loans, student loans - all extended - debt does not go away it grows.
Danielle is worth following on X.
got a solid lol out of the linked table of price/income ratios provided by CBA in here:
https://www.macrobusiness.com.au/2023/11/theres-never-been-a-worse-time-...
Hey, Sydney at 5.1, that's not to bad.
*Dual income...
Oh. Reality is dual incomes are paying these things, but why stop there? Get the kids working to pay it off too, put up the chart with quad incomes, and hey, only 2.55 to income ratio... cheap! It's so weird that house prices have traditionally been measured price:average income, but now we adjusted the way it's calculated. Sydney would be 10.2: income if calculated the traditional way.
Alan Kohler:
https://www.thenewdaily.com.au/finance/2023/11/09/alan-kohler-the-rba-is...
"Chalmers must have known what the RBA’s inflation forecast was when he appeared in the blue room because his Treasury Secretary, Stephen Kennedy, is on the Reserve Bank board.
He also knows that the RBA’s view on inflation, not Treasury’s, is what determines the level of interest rates, but he kept referring to Treasury forecasts, not the RBA’s.
So we can only conclude that he was deliberating telling us there is now a fundamental disagreement between the RBA and Treasury about the outlook for inflation, and distancing himself from the rate hike that he knew was coming on Melbourne Cup Day.
Why do they disagree? Because this government’s main economic policy, like that of the Coalition in 2005-06, is immigration, and it wants the RBA to let it happen without crushing borrowers."
Cant for the life of me understand why the labour party has got to flood the country with migrants.....
whats the main goal here ,anyone know?
To keep working class wages down Simba.
https://www.smh.com.au/politics/federal/we-need-migrants-to-build-more-h...
Got a young one apprenticed in construction and if they pull this off it's a direct threat to his career earnings prospects. Where the F is the ACTU?
And Alan concludes that article:
"GDP and aggregate demand would be falling if it wasn’t for 2.8 per cent population growth, and interest rates would be on hold or even getting cut, not increased."
Check that out, 'interest rates would be on hold or even getting cut'.
frog wrote:US focussed. But flow on effects will come here. Tens of billions in loans extended and payment not required or made into 2nd mortgages during covid now requiring payments. Home loans, car loans, student loans - all extended - debt does not go away it grows.
Just listened to this. Very interesting and certainly supports my thoughts on a similar correction to Aussie housing.
I'll have a stab.
It's multi-faceted
- we'd be in a recession without the increase in GDP brought about by increased population (political poison)
- an array of powerful lobby groups benefit from population growth - building, banking, real estate, media, property developers etc etc
- population growth addresses certain skills shortages (whether or not Australians could be trained up for the same jobs is up for debate. This also leads us to a discussion about "desirable levels" of unemployment).
- migration suppress wages in certain areas
Although seldom discussed, population joins monetary and fiscal policy as one of the big three economic levers.
Immigration has transformed Australia into the successful multicultural society it is today.
Rapid population growth has made our houses more valuable and enabled our businesses to make larger profits by creating a bigger market.
Yet population growth incurs costs and has masked falling productivity growth alongside heightened pressure on key services and rapid inflation of property prices.
This has undermined living standards and fuelled the current rental and housing crisis.
Supply cannot readily keep pace with Australia’s current population trajectory. Interestingly enough, it was the period of low immigration during COVID-19 that finally enabled wage growth to pick-up, rents to fall and unemployment to hit record lows![6]
We need to bring population policy to the forefront of policy debate and understand that it is not a limitless panacea for economic prosperity but a policy tool which must be carefully managed in the interests of the population at large.
https://www.sydney.edu.au/business/news-and-events/news/2023/08/07/popul....
velocityjohnno wrote:To keep working class wages down Simba.
https://www.smh.com.au/politics/federal/we-need-migrants-to-build-more-h...
Got a young one apprenticed in construction and if they pull this off it's a direct threat to his career earnings prospects. Where the F is the ACTU?
Wait and see what happens when China Road and Bridge company starts winning Aus tenders. They can do all these projects for 1/2 the price. I’m amazed at some of the projects they built and how little the budget was.
Yep with all the quality of something made in china.
House prices - going to go up , down or sideways ?
Opinions and anecdotal stories if you could.
Cheers