Aussie News n matters

[zuoom]

Vivian Wai-yin Kwok, 02.18.08, 1:37 AM ET

HONG KONG - Shares of Australia & New Zealand Banking Group dove 6% Monday morning after Australia's third-largest lender said the deterioration in the credit markets and raised loss provisions would cancel out profit growth in 2008.

In an earnings update issued Monday, ANZ, as it is commonly known, estimated it would write off $200 million on a derivative position with a U.S. monoline insurer.

ANZ disclosed it entered into the U.S. derivative market to buy and sell credit protection between 2005 and February 2007. The problematic U.S. monoline insurer, which ANZ didn't identify, has been downgraded to a "CCC" non-investment credit rating. Uncertainty over the ability of that firm to meet its obligations has led ANZ to make loss provisions of $200 million.

The lender also was required to make another provision of 90 million Australian dollars ($82.1 million) as a result of a significant credit rating downgrade for a large commercial property client. The property client is widely understood to be Centro Properties Group, the second-largest shopper mall owners which had been sweating to refinance its due loans of 3.9 billion Australian dollars ($3.6 million) in the past few months. The developer said Monday it had won a reprieve from its U.S. and Australian bankers to refinance 23.6 billion U.S. dollars in short-term debt expired last Friday.

Another ailing client in the resources sector led ANZ to make an additional provision of 51million Australian dollars ($46.5 million) for its failure.

The bank forecasts that before provisions, it could beat its 2007 profit increase of 11.5% this year. However, that growth is expected to be offset by write-offs associated with the changing global credit environment.

"While the Australian economy is expected to remain strong, the ongoing instability in global credit markets adds a higher than normal level of uncertainty," ANZ Chief Executive Officer Mike Smith said. The bank has not been immune from global market issues, including uncertainty around funding costs, even though it has no direct exposure to the U.S. subprime mortgage market, he said.

ANZ shares dropped 1.45 Australian dollars ($1.32), or 6.1%, to 22.46 Australian dollars ($20.51) on Monday.

via : http://www.forbes.com/markets/2008/02/18/anz-loss-provision-markets-equity-cx_vk_0218markets2.html

[zuoom]

Article from: Sunday Herald Sun
Kate Adamson, Lincoln Wright and Steve Connolly

January 27, 2008 12:00am

AUSTRALIAN homebuyers are slugged with the highest interest rates and stamp duty costs in the Western world, making housing affordability among the worst on the planet.

As more mortgage pain looms, with the 11th straight interest rate rise by the Reserve Bank tipped for next month, Prime Minister Kevin Rudd and Treasurer Wayne Swan are among the dwindling number of mortgage-free Australians.

Mr Swan paid off his Brisbane family home in Kedron more than a decade ago.

"Wayne worked hard to pay off his mortgage some time ago, having first purchased his house in 1981 for $45,000," his spokesman said.

The average house price now in Kedron is $450,000.

And, when not at his official residences, Mr Rudd, married to multi-millionaire businesswoman Therese Rein, lives mortgage-free in a $1 million Brisbane home they paid $384,000 for in 1994.

The average Victorian is paying interest rates more than 2.5 per cent higher than other Western countries, including 3.25 per cent more than the US and 2.75 per cent more than Europe.

Compared with Australia's current official rate of 6.75 per cent, Canada has only 4 per cent and the UK 5.5 per cent.

Victorians face some of the highest stamp duties in the world, paying between 5 and 6 per cent on a home depending on the value of the property, with the State Government collecting a record $3.6 billion in stamp duty last year. Homebuyers are burdened with $13,660 in stamp duty for a $300,000 house and $22,810 on a $500,000 house. It's far more than the US, where homebuyers pay up to 2.2 per cent, and much higher than the UK.

Australia has among the most unaffordable housing anywhere in the world, according to the just-released 2008 Demographia International Housing Affordability Survey.

Melbourne ranks the 22nd least affordable housing market in the world, behind Perth and Sydney.

Seven of the 30 Rudd Government ministers do not declare a mortgage in the registry of interests, which will be again updated when parliament resumes next month.

Opposition Leader Brendan Nelson owns a home at St Ives on Sydney's north shore and has a mortgage with the National Australia Bank.

via : http://www.news.com.au/heraldsun/story/0,21985,23114270-2862,00.html

read via : http://forums.delphiforums.com/sammyboymod/messages?msg=167866.1

[zuoom]

via : http://www.bloomberg.com/apps/news?pid=20601080&sid=aJj2s6tYuzU8&refer=asia
By Heidi Couch


March 10 (Bloomberg) -- Foreclosures in New South Wales, Australia's biggest state, are set to rise to a record this year after the central bank increased rates twice in the past two months to a 12-year high.

Banks are in the middle of their third mortgage rate increase this year and that's pushing more Australian families out of their homes, said Tim McKibbin, acting head of the Real Estate Institute of Australia's New South Wales branch.

Mortgage payments are rising at least 2 1/2 times faster than household incomes. Lenders including Commonwealth of Australia Bank Ltd. and National Australia Bank Ltd., the nation's biggest, have raised loan rates three times this year, boosting the average monthly mortgage payment by more than the average annual increase in wages.

``We're only now really starting to see a situation where defaults arise because people aren't able to meet their payments,'' said Roger Mendelson, chief executive officer at Melbourne-based Prushka Fast Debt Recovery, one of Australia's largest privately owned debt collectors. Previously, defaults were a result of divorces or job losses, said Mendelson, whose agency has four New South Wales offices among its 14 branches.

The Reserve Bank of Australia last week increased its benchmark borrowing cost for the fourth time in seven months to 7.25 percent to cool inflation that grew at its fastest pace in 16 years in the fourth quarter.

Banks are charging more as the global credit crunch raises funding costs after investors fled debt markets. Macquarie Group Ltd., Australia's biggest investment bank, on March 5 said it will grant fewer residential mortgages after funding costs increased in the wake of the U.S. subprime market's collapse.

Global Crunch

``Banks' funding costs remain elevated,'' Gerard Minack, chief market strategist for Morgan Stanley Australia, wrote in a March 5 report. ``This is due to global financial turbulence and the peculiar exposure of the Australian financial system, which has been heavily dependent on foreign markets for funding.''

Home prices in western Sydney and Melbourne, poorer areas of Australia's two biggest cities, may already be heading in the opposite direction.

Some properties in suburbs such as Liverpool in Sydney's southwest have dropped in price so it can make more sense to walk away and let the bank take possession, said Halil Mustafa, sales director for the Real Estate Shop's office in the area.

One mortgage holder owed A$600,000 and received bids of no more than A$330,000 when his property went to auction, Mustafa said. The seller had previously refinanced, adding more debt to the A$475,000 or so he borrowed to buy the house, he said.

`Walking Away'

``There's been no offers since, so he finds himself in a very difficult position,'' Mustafa said. ``Some people are just walking away from their properties. The equity's halved and they're not going to recoup that.''

Housing affordability dropped to the lowest in at least 33 years in December, as average disposable incomes stayed below the amount needed to qualify for the median home loan for the fifth- straight quarter, according to an index compiled by the Housing Industry Association and the Commonwealth Bank.

Repossessions in New South Wales, the country's most populous state, rose 1.6 percent to 5,454 last year, according to figures from the state's Supreme Court. Victorian repossessions increased to 2,720 in the year to June 30 and have tripled in the past four years, according to the state government.

The actual number of mortgage defaults may be four times the repossession figures, which only include seizures and sales approved by the Supreme Courts of New South Wales and Victoria, said Mendelson at Prushka.

Housing Stress

Rising borrowing costs are pushing more families into housing stress, with some 1.1 million Australians paying more than 30 percent of their income in rent or home-loan costs, Prime Minister Kevin Rudd said in a speech on March 3 in Brisbane.

``Australians are paying the second-highest mortgage rates in the developed world,'' Rudd said. ``Housing is at the worst it has been in living memory.''

National Australia Bank raised its rates March 6 and has now increased them by 0.7 percentage points this year, exceeding the Reserve Bank's 0.5 percent increase over the period. National Australia said higher financing costs in the wake of the U.S. subprime collapse account for the difference.

``Escalating wholesale funding costs have been impacting NAB since August 2007,'' Ahmed Fahour, head of the bank's Australian operations, said March 6 when the lender raised rates.

The average first homebuyer's monthly repayments would have gone up some 7 percent to A$2,843.76 a month if they had taken out a National Australia Base Variable Rate mortgage, outpacing average annual wage growth of 4.6 percent over the five years to November 2007, based on Bloomberg calculations.

``Every interest-rate rise will add more and more families into that mortgage-stress environment,'' said McKibbin of the Real Estate Institute's New South Wales branch.

To contact the reporter on this story: Heidi Couch in Sydney at hcouch@bloomberg.net

read via : http://forums.delphiforums.com/sammyboymod/messages?msg=169980.1

[zuoom]

http://www.news.com.au/business/story/0,23636,23347253-462,00.html

By David Uren

March 10, 2008 03:21am
Article from: The Australian

    * Looming economic downturn predicted
    * Home and share markets to plummet
    * China's growth won't insulate Australia

THE economy is headed for recession next year, with a 50 per cent plunge in share values and a double-digit drop in house prices.

Do I have your attention?

While the Reserve Bank takes a largely benign view of the unfolding credit crisis, believing China's growth will insulate us from its worst consequences, others are less sanguine.

Morgan Stanley's chief market strategist Gerard Minack introduced a brief to clients last week saying: "I'm bearish - really bearish."

He argues that Australia will be dragged into recession by a slowing world economy, the tightening grip of the credit crisis, and the effects of the Reserve Bank's succession of interest rate hikes.

Economists are often trapped by the inertia of the moment, failing to see the magnitude of both booms and busts and being forced into constant revisions of their forecasts.

This makes Minack, who takes a long view, worth listening to.

He argues that the market is coming to the end of its fifth bull run since the beginning of the 20th century.

The bear markets that followed produced falls in the region of 50 per cent and lasted for two to three years.

The problem is not that the market is overvalued, relative to earnings, but rather that earnings are themselves inflated and headed for a fall.

Based on profit figures back to 1970, earnings are 44 per cent above their long-term trend.

In the three recessions since then, real earnings per share fell by between 36 and 65 per cent from peak to trough.

"You've got to argue that earnings do revert to their mean. On almost every measure we've got for earnings, be it profit share of GDP, return on assets or margins, it looks unsustainable," he says.

Earnings have been inflated by spendthrift households running down their savings. While the Reserve Bank has argued that fears about housing debt are without foundation because household balance sheets are strong, Minack says the picture looks a lot worse when you look instead at household cash flow.

The latest annual national accounts show the household sector remains cashflow negative, with the deficit of 3.75 per cent of GDP accounting for half the current - account deficit.

Besides, he says, household balance sheets also looked fantastic in Japan in 1990, before its lost a decade of economic growth.

Minack is not persuaded by the proposition that Australia's housing market is somehow immune from the excesses of the US.

Australians have more leverage, are as reliant upon equity extraction and base their household balance sheet on a housing stock that is far more expensive than their US equivalents.

The household sector is booming at present, but is vulnerable to any reversal in fortune. The moment unemployment starts to rise, people will start defaulting on their housing loans.

The view that Australia will be saved by China and the resources boom underestimates the magnitude of the forces ranged against us.

China's growth may continue to require large flows of commodities, but commodity markets at present are being driven by speculative money that can flee as quickly as it came.

Base metals prices could fall by 40 per cent and bulk commodities by 15 per cent without heralding the end of the Chinese driven "super-cycle".

Commodity markets are facing not only the prospect of a recession in the US, but also the possibility of recessions in Japan and Britain, with a slowdown in Europe.

The long-awaited rise in the volume of mining exports will not save us, with Minack calculating it will raise GDP by, at most, 0.1 or 0.2 percentage points.

The terms of trade, by contrast, has lifted GDP by about 9 per cent, while the increase in business investment caused by the resources boom has added about 3.5 percentage points.

"People react as though there is some injustice. Here we are with the market down 20 per cent, when our economy looks strong and China keeps growing," he said.

"People miss the point that we're hugely wrapped up in the global credit crunch because we are one of the world's largest issuers of capital, with the most over-priced finance sector in the developed world and a rickety housing sector.

read via : http://forums.delphiforums.com/sammyboymod/messages?msg=169980.19

[zuoom]

http://www.abc.net.au/news/stories/2008/03/18/2192181.htm
Sydney more expensive to live than NY: report

Posted Tue Mar 18, 2008 8:01am AEDT
Updated Tue Mar 18, 2008 10:09am AEDT
High density housing in suburban Sydney.

Expensive: High density housing in Sydney (Getty Images: Ian Waldie)

    * Audio: Finance commentator Paul Clitheroe discusses housing affordability with ABC 702 host Deb Cameron. (ABC News)
    * Audio: Lack of affordability on Aust housing market: Report (AM)

A new report says Australia's housing market is one of the least affordable in the developed world.

Research by AMP and the National Centre for Social and Economic Modelling (NATSEM) shows property prices have jumped 400 per cent since 1986, while income has increased by only 120 per cent.

The report also found Australians are taking more debt into retirement.

Professor Ann Harding from NATSEM says more than double the number of retirees are still paying off a mortgage, compared to the same age group 12 years ago.

"The failure of younger generations to get into the housing market, and the big increase for them also in how many were purchasing their home rather than having paid it off, just suggests in the future there may be many more strains on the aged pension system," she said.

She says New South Wales is the least affordable state.

"I think this report just shows that house prices have just become too high," she said.

"Quite extraordinarily, it's actually more expensive now to live in Sydney than in New York, relative to income.

"And this study shows that right across the country our housing market is very unaffordable."

Tags: industry, housing, australia, nsw, sydney-2000

via : http://forums.delphiforums.com/sammyboymod/messages?msg=171181.1

================

do have a read on the comments made in SBM though.

[zuoom]

via : http://forums.delphiforums.com/sammyboymod/messages?msg=174753.1

http://www.news.com.au/heraldsun/story/0,21985,23566323-2862,00.html
Victorian housing crash fears

Laurie Nowell

April 20, 2008 12:00am

VICTORIAN house prices could crash by as much as 30 per cent, leaving tens of thousands of families owing more than their homes are worth, a report reveals.

The International Monetary Fund's twice-yearly World Economic Outlook this week singles out Australia as fourth among developed countries at risk of a major property crash.

Victoria has seen a property boom second only to NSW in the past decade, with property values increasing 180 per cent while wages rose by only 30 per cent.

Welfare agencies warn a crash would leave tens of thousands of Victorians in negative equity mortgage traps - in which the money they owed on their homes was less than their value.

"We have already seen there is a squeeze on, with people struggling to pay their mortgages and household bills," said Micaela Cronin, of Wesley Mission Melbourne.

"If there is a collapse in property prices, people will have no way of escape.

"As we have seen in the US, people will just walk away from their homes."

The property downturn has started to bite.

About 40 per cent of all bankruptcies involve a home. Total bankruptcies are up 30 per cent in the past year.

The welfare agencies have identified Frankston, Dandenong, Craigieburn, Roxburgh Park and Cranbourne as among the suburbs most vulnerable.

Uniting Care financial counsellor Gary Rothman said many house-land packages were traps for low-income earners.

"We are seeing people start off with negative equity situations, because they are being offered no-deposit loans greater than the value of the property being purchased," he said.

After a 10-year housing boom, the IMF report says Australia is one of a top four at risk of a price collapse - behind Ireland, the Netherlands and the UK.

Australia's housing-debt-to-value ratio is among the highest in the world at 80 per cent, the report said.

It also identifies a "house price gap" - the difference between the price of a home and the country's economic fundamentals, including salaries, interest rates and population growth.

It says Australia has experienced one of the world's "largest unexplained increases in house prices".

If its prediction is correct, an average Melbourne home - now worth $400,000 - could be worth only $280,000.

Housing Industry Association chief economist Harley Dale said Australia faced "one of those globally uncertain times" that were infrequent. But crash predictions were worst-case scenarios, he said.

[Vorsprung durch Technik]

sounds good... dunno whether one female friend there will gain with the decrease in rentals too

[zuoom]

AUD vs. SGD

via : http://forums.hardwarezone.com.sg/showthread.php?t=2110883

[zuoom]

RBA's soothing house talk understandable

October 30, 2008 - 12:06PM

Soothing talk about housing prices from one of Australia's top central bankers is understandable, given the damage that could be done by a slump in the housing market.

In a speech to a conference on bankruptcy, of all things, Reserve Bank of Australia (RBA) deputy governor Ric Battellino said household confidence had been undermined by volatile financial markets, sharp falls in share prices and a loss of faith in financial institutions.

"And, to top it off, some commentators are predicting sharp falls in house prices here in Australia," he said.

Central bankers are not typically concerned with the fortunes of individual property investors.

Nor, normally, are they preoccupied with the ebb and flow of asset markets.

These aren't normal times.

The global share market, along with Australia's, has suffered a slump of similar magnitude to the 1987 and 2000 crashes.

The panic in credit markets probably has no precedent, at least on a global scale, since the 1930s.

The prospects for the world economy over the next year or so are dim and it seem the commodities boom driving the Australian economy forward in the past decade is changing into reverse gear.

The last thing policymakers need right now is another major shock to the economy.

And, make no mistake, a big fall in housing prices would be a huge shock.

Five years ago, in its World Economic Outlook, the International Monetary Fund (IMF) published an article titled "When Bubbles Burst".

The article, written by Thomas Helbling and Marco Terrones, defined a housing market bust as a fall in prices of at least 14 per cent (after adjusting for consumer price inflation) with an average of 30 per cent.

For shares, a bust meant a fall of at least 37 per cent, with a 45 per cent average.

Their most chilling result concerned the impact of housing and share market busts in output (best measured by gross domestic product - GDP).

Three years after the average share market bust, GDP was likely to be four per cent lower than it would have been if not for the slump, they found.

For housing, the loss of output was double that, eight per cent of GDP.

Moreover, housing price slumps typically lasted for four years - one and a half years longer that share price busts.

Among the reasons they gave for this was that housing slumps had bigger negative effects on wealth, while their adverse effects on banking systems were stronger and more severe, observations that ring very true as the US economy sinks into recession.

So central bankers like Ric Battellino can be forgiven for wishing to hose down fears of a collapse in housing prices, especially if those fears are not soundly based.

Fortunately, Battellino's arguments appear sound.

In short, he said Australia's housing market was not heading in the same direction as that of the US - it is actually leading the way, having peaked three years earlier in 2003.

Moreover, the local market is characterised by undersupply and considerable pent-up demand in the event of a dip in prices, in contrast to the massive oversupply hanging over the US market.

What's more, Australia has avoided the collapse in lending standards that in the US led to soaring default and foreclosure rates, the catalyst for the sub-prime loans crisis and possible global recession.

Even so, there is potential for a weakening economy to set off a nasty chain reaction of rising unemployment, increasing defaults, forced sales, dropping prices, an even weaker economy, and so on.

Although he did not say so explicitly, it seems likely that Battellino and his colleagues at the RBA would prefer to avoid it if they can.

They have enough to deal with as it is.

via : http://news.smh.com.au/business/rbas-soothing-house-talk-understandable-20081030-5btr.html

[zuoom]

U.S. Home Resales Fall; Prices Drop by Record 13.2% (Update1)
2008-12-23 15:25:07.146 GMT


     (Adds comment in fourth paragraph)

By Shobhana Chandra
     Dec. 23 (Bloomberg) -- Sales of previously owned homes in
the U.S. fell more than forecast in November and prices dropped
by the most on record, indicating the real estate slump will
extend into a fourth year and worsen the recession.
     Purchases declined 8.6 percent to an annual rate of 4.49
million, from a 4.91 million rate in October that was less than
previously estimated, the National Association of Realtors said
today in Washington. The median price dropped 13.2 percent from
a year earlier, the biggest decline since records started in
1968. Separately, the Commerce Department reported today that
new-home sales fell 2.9 percent last month to a 17-year low.
     Prices will plunge further as job losses sap demand,
foreclosures add to the property glut and prospective buyers get
turned away by mortgage lenders. The Federal Reserve this month
cut its benchmark interest rate target to as low as zero and
said it would take more steps to ease borrowing as the longest
postwar recession looms.
     “November sales just collapsed,” said Chris Low, chief
economist at FTN Financial in New York. “Price declines are
accelerating. As bad as this is, it’s going to be considerably
worse in a month’s time.”
     Resales were forecast to fall to a 4.93 million annual rate
from an originally reported 4.98 million in October, according
to the median estimate of 63 economists in a Bloomberg News
survey. Projections ranged from 3.98 million to 5.2 million.
     Sales dropped 10.6 percent compared with a year earlier.
Resales averaged 5.67 million in 2007 and before today’s report,
fluctuated around a 4.96 million rate this year.
     The number of previously-owned unsold homes on the market
at the end of November represented 11.2 months’ worth at the
current sales pace, up from 10.3 months’ at the end of the prior
month.

                      Historic Price Decline

     The median price of an existing home fell to $181,300, and
the percentage drop from a year ago was “probably the largest
price decline since the Great Depression,” although records
don’t go back that far, said NAR Chief Economist Lawrence Yun.
     Foreclosures and short sales accounted for 45 percent of
last month’s home purchases, Yun said.
     Resales of single-family homes fell 8 percent to an annual
rate of 4.02 million. Sales of condos and co-ops declined 13
percent to a 470,000 rate.

                        Regional Breakdown

     Purchases declined in all regions of the country, led by
drops of 12 percent in the Northeast and 10.9 percent in the
South. Sales fell 7.4 percent in the Midwest and 4.3 percent in
the West. Prices also fell throughout the country, led by a
decline of 25.5 percent in the West.
     Resales account for about 90 percent of the market. Sales
of existing homes are compiled from contract closings and may
reflect contracts signed one or two months earlier.
     New-home sales, recorded when a contract is signed, are
considered by economists to be a more timely barometer.
     The Federal Reserve on Dec. 16 cut its benchmark interest
rate target to a range of zero to 0.25 percent, and said it
stands ready to expand purchases of Fannie Mae, Freddie Mac and
Federal Home Loan Bank debt under a program aimed at reducing
mortgage costs.
     The average rate on a 30-year fixed-rate loan fell to 5.18
percent in the week ended Dec. 12, the lowest in more than five
years, according to the Mortgage Bankers Association.
     President-elect Barack Obama on Dec. 13 said he will
develop plans to limit foreclosures and “dramatically increase
the number of families who can stay in their homes.” One tenth
of U.S. families who own a home are in financial distress, Obama
said.

                      Homebuilders’ Shares

     The S&P Supercomposite Homebuilding Index is down a third
so far this year, reflecting the plight of homebuilders.
     Ara Hovnanian, chief executive officer of Hovnanian
Enterprises Inc., New Jersey’s biggest homebuilder, called on
the government to provide an economic stimulus for the housing
industry.
     “If government wants to get to the root of the problem
they need to fix housing first,” Hovnanian said in a conference
call on Dec. 17. Hovnanian, whose company reported a fiscal
fourth quarter loss, didn’t specify what type of government
intervention he wants in the housing market.

Related news:
For stories on U.S. homebuilding: {TNI US HOM <GO>}
For stories on the U.S. economy: {TNI US ECO <GO>}
Top Bloomberg News real estate stories: {TOPR <GO>}

--With reporting from Jody Shenn in New York. Editor: Mark
Rohner

To contact the reporter on this story:
Shobhana Chandra in Washington at +1-202-624-1888 or
schandra1@bloomberg.net

To contact the editor responsible for this story:
Chris Anstey at +1-202-624-1972 or canstey@bloomberg.net

via : http://www.singsupplies.com/showthread.php?t=13054

[zuoom]

http://www.usatoday.com/money/world/2008-12-28-australia-boom-bust_N.htm

Boom in Australia goes bust as global slowdown hits

For Leigh Davies, the good times ended with a phone call.
Until that day in mid-September, he could hardly keep up with all the demand for his firm's mining equipment. Like just about everyone else in the mineral-rich state of Western Australia, he was riding a worldwide commodities boom, ignited by China's seemingly insatiable demand for the riches beneath the Australian soil — iron and copper ore, zinc, magnesium, coal.

Then the phone rang, two days after the collapse of Wall Street investment bank Lehman Bros.: "We got a call from one of our better clients, saying, 'Most of our finances are tied up in Lehman bank, and we're suspending your contract until we get it sorted out.' "

From there, things got worse. Other clients, caught up in a sudden credit crunch, delayed or canceled projects, idling all eight of Davies' drill rigs for the first time ever. "We've got no work," he says.

In a matter of weeks, Australia's boom has gone bust. Now economists at Citigroup and JPMorgan Chase, among others, are forecasting that Australia's economy will shrink this quarter and next, tipping the land down under into a recession for the first time since 1991. JPMorgan sees the jobless rate — a record low 4% just 10 months ago — rising to 9% by 2010.

FIND MORE STORIES IN: United States | Europe | Wall Street | Christmas | China | Citigroup | JPMorgan Chase | mid-September | Australians | Queensland | Prime Minister Kevin Rudd | Western Australia | Rio Tinto | Davies | Lehman Bros. | Glenn Stevens
Davies is stunned by the speed with which it all unraveled. "The whole of Australia had been screaming for more drilling rigs and equipment. We had a severe shortage of manpower. It all stopped within two weeks."

"It was very quick," says Ron Wyndow, whose firm in Karrinyup, Western Australia, provides equipment and services to mining and mineral exploration firms. "It hit about eight weeks ago. Just, bang!"

The financial crisis is hitting debt-laden Australians hard. "We're headed for a recession for the same reason the USA is in one now — the bursting of a debt-financed speculative bubble," says economist Steve Keen of the University of Western Sydney, one of the first forecasters to sound the alarm. Keen says Australian households have been adding debt — as a percentage of economic output — even faster than their U.S. counterparts over the past 18 years. Now they're feeling pinched and are cutting back. "We have a homegrown recession coming our way, regardless of what happens in the rest of the world," Keen says.

"Shoppers are on strike," Canberra-based consultants Access Economics reported recently. "Their confidence is shattered, and they are pulling back sharply on discretionary spending." Access expects retail sales to drop 0.1% in the fiscal year that ends in June and to grow an anemic 0.9% the year after that.

Keen predicts the downturn will unfold a bit differently than it did in the USA, where problems began in the housing market and spread to the broader economy. "We're likely to go into the macro crisis first as debt growth plummets; then a housing crisis as the newly unemployed are unable to maintain their mortgages; and finally a credit crunch where the banks' solvency doesn't look so hot anymore."

China, Australia's No. 1 trading partner, isn't providing as much shelter as expected from the global economic tempest. China itself has proved unexpectedly vulnerable to slowdowns in the United States and Europe. Its economic growth is decelerating rapidly from the double-digit annual pace of the past decade. Last month, Chinese exports fell for the first time in seven years.

"China's economy has slowed much more quickly than anyone had forecast," says Glenn Stevens, governor of Australia's central bank. Add in China's plummeting stock market and crumbling housing prices, and "There goes Australia's China blanket," economist Keen says.

"We were living in a bubble in Australia, thinking that we'd manage because of China and because of our resources," says Nick Read of Drill Technics Australia, a Queensland maker of drill rigs. "The fact is, resources have hit rock bottom, and China is struggling also. It happened very fast."

Australian policymakers have responded aggressively to the economic threat. Stevens' Reserve Bank of Australia has been chopping interest rates. And the government of Prime Minister Kevin Rudd is spending more than $10 billion to jump-start the economy.

For now, businesses are hunkering down. Anglo-Australian mining giant Rio Tinto just announced plans to slash 14,000 of its 112,000 jobs. Drill Technics, its rigs running just half the time, has cut its drilling crew to 15 from 32. Davies has laid off 15 of his 27 workers. "If you want to be in business after Christmas, you have to cut costs," he says.

via : http://www.singsupplies.com/showthread.php?t=13565

[zuoom]

http://www.abc.net.au/news/stories/2009/01/20/2469595.htm?section=justin

China's growth slump to hurt Australia: Rudd

Posted Tue Jan 20, 2009 12:31am AEDT
Updated Tue Jan 20, 2009 12:39am AEDT

The Federal Government is grappling with a greater-than-expected fall in economic growth in China.

In a speech last night, Prime Minister Kevin Rudd said China's economy will have a major influence on how far Australia's economy slides.

China's slump in domestic demand has seen commodity prices fall, hurting Australian businesses and government revenue.

"China has been hit much harder than forecasters had predicted," Mr Rudd said.

"Its growth has slowed sharply - from 12 per cent in 2007 to 8.5 per cent last year. Its manufacturing sector - which is 40 per cent of its GDP - has been contracting for five months.

"Because China takes 15 per cent of our exports, its slowdown will affect Australia."

Treasurer Wayne Swan says his department will be paying particular attention to the Chinese situation.

"A cut in Chinese growth of that magnitude would be very significant for the Chinese economy domestically, and quite significant in terms of the forward outlook for commodity prices and most certainly, growth in this region," he said.

The Government is assessing economic data to decide whether to develop another economic stimulus package.

via : http://www.singsupplies.com/showthread.php?t=15453

Sharp Recession in Australia Forecasted

 Author: 123jump.com Staff
123jump.com
Last Update: 3:19 PM ET January 19 2009

Australian stocks rebounded after precious and base metals rose on the specualtion that the recent stimulus in Europe and the U.S. will drive the demand higher. Separately, a private economic forecast suggested a sharp slide into a recession. Western Australia property prices drop.

 
3:00AM New York, 7:00PM Sydney – Australian economy estimated to slide into a recession from a recent boom. Property values decline in West Australia.

Australian stocks on a rise in commodity stocks as metal prices increased on expectations that global government intervention will help to forestall a deepening global recession. Copper prices rose 5.1% and gold prices rallied 4% on Friday last week.

Realty stocks however pared gains on a report that showed that house prices are falling in Western Australia as resource boom fades.

In Sydney trading ASX 200 index rose 1.1% or 38.4 to 3,589.30.

Of the ASX 200 index stocks 127 increased, 52 declined, and 21 were unchanged. Dexus Property led gainers in the index shares with an increase of 8.8% followed by Australand Property gaining 8.2%.

Australia to Slip into Recession

Economic consultancy firm, Access Economics reported in its quarterly economic report released today that Australia is headed for a recession as growth continues to slow in the global economy.

The Reserve Bank of Australia is expected to lower its key lending rate to 2.5% at its next monetary policy meeting. However, after a sharp drop in interest in the last meeting may not require immediate cut in rates.

According to the report, the country''s unemployment rate may increase 7% in early 2010 and the current account deficit will increase to A$100 billion in the fiscal 2009, while the Australian dollar may declined to 56 cents against the dollar from 67.6.

Access Economics head Chris Richardson said, “The economy will be slip-sliding into recession. Australia''s recent prosperity will unwind scarily fast.”

Property Values Drop in Western Australia

The Australian reported today that the Real Estate Institute of Western Australia reported that the property market in West Australia is deteriorating as the resource boom unwinds.

Rents dropped 8% in Geraldton and in the northwest fibro shacks that were rented for A$1,000 a week are now vacant due to retrenchments.

Real Estate Institute of Western Australia deputy president David Airey said sales in Perth''s affluent western suburbs fell to 85 in the quarter to December from 150 in the previous quarter and 300 in the same period a year earlier.

House prices slipped 4% in Perth in the quarter to December, while the median prices of a Perth house fell to A$418,000 from $473,000 in December 2007.

“Properties priced up to $400,000 in areas popular with first-home buyers have either been steady in price or fallen only very, very marginally,” said REIWA.

Gainers & Losers

Dexus Property led advancers in the ASX 200 index shares with a rise of 8.8% followed by increases in Australand Property of 8.2%, in Newscrest Mining of 8%, in Linc Energy of 7.7%, and Pacific Brands of 6.9%.

Commodity stocks gained after copper prices soared 5.1% and gold prices increased 4% on Friday last week. In today''s trading gold prices rallied $19 to $839 per ounce and copper prices edged up to $1.5275 per ton. Acquarius Platinum gained 6.8%, Lihir Gold jumped 6.7% and Paladin Energy climbed 6.5%.

Centro Retail Group led decliners in the ASX 200 index shares with a decline of 17.5% followed by losses in Macquarie DDR TR of 12.1%, in ING Industrial of 8.8%, in HFA Holdings of 8%, and FKP Property Group of 6.8%.

via : http://www.singsupplies.com/showthread.php?t=15452

--------------

rather expected. China cough, Australia chock.

[zuoom]

have a read about Australia property rates, stamp duties n general matters via :
http://www.celicasg.org/index.php?topic=2691.0

[zuoom]

Sharp Recession in Australia Forecasted

 Author: 123jump.com Staff
123jump.com
Last Update: 3:19 PM ET January 19 2009

Australian stocks rebounded after precious and base metals rose on the specualtion that the recent stimulus in Europe and the U.S. will drive the demand higher. Separately, a private economic forecast suggested a sharp slide into a recession. Western Australia property prices drop.

 
3:00AM New York, 7:00PM Sydney – Australian economy estimated to slide into a recession from a recent boom. Property values decline in West Australia.

Australian stocks on a rise in commodity stocks as metal prices increased on expectations that global government intervention will help to forestall a deepening global recession. Copper prices rose 5.1% and gold prices rallied 4% on Friday last week.

Realty stocks however pared gains on a report that showed that house prices are falling in Western Australia as resource boom fades.

In Sydney trading ASX 200 index rose 1.1% or 38.4 to 3,589.30.

Of the ASX 200 index stocks 127 increased, 52 declined, and 21 were unchanged. Dexus Property led gainers in the index shares with an increase of 8.8% followed by Australand Property gaining 8.2%.

Australia to Slip into Recession

Economic consultancy firm, Access Economics reported in its quarterly economic report released today that Australia is headed for a recession as growth continues to slow in the global economy.

The Reserve Bank of Australia is expected to lower its key lending rate to 2.5% at its next monetary policy meeting. However, after a sharp drop in interest in the last meeting may not require immediate cut in rates.

According to the report, the country''s unemployment rate may increase 7% in early 2010 and the current account deficit will increase to A$100 billion in the fiscal 2009, while the Australian dollar may declined to 56 cents against the dollar from 67.6.

Access Economics head Chris Richardson said, “The economy will be slip-sliding into recession. Australia''s recent prosperity will unwind scarily fast.”

Property Values Drop in Western Australia

The Australian reported today that the Real Estate Institute of Western Australia reported that the property market in West Australia is deteriorating as the resource boom unwinds.

Rents dropped 8% in Geraldton and in the northwest fibro shacks that were rented for A$1,000 a week are now vacant due to retrenchments.

Real Estate Institute of Western Australia deputy president David Airey said sales in Perth''s affluent western suburbs fell to 85 in the quarter to December from 150 in the previous quarter and 300 in the same period a year earlier.

House prices slipped 4% in Perth in the quarter to December, while the median prices of a Perth house fell to A$418,000 from $473,000 in December 2007.

“Properties priced up to $400,000 in areas popular with first-home buyers have either been steady in price or fallen only very, very marginally,” said REIWA.

Gainers & Losers

Dexus Property led advancers in the ASX 200 index shares with a rise of 8.8% followed by increases in Australand Property of 8.2%, in Newscrest Mining of 8%, in Linc Energy of 7.7%, and Pacific Brands of 6.9%.

Commodity stocks gained after copper prices soared 5.1% and gold prices increased 4% on Friday last week. In today''s trading gold prices rallied $19 to $839 per ounce and copper prices edged up to $1.5275 per ton. Acquarius Platinum gained 6.8%, Lihir Gold jumped 6.7% and Paladin Energy climbed 6.5%.

Centro Retail Group led decliners in the ASX 200 index shares with a decline of 17.5% followed by losses in Macquarie DDR TR of 12.1%, in ING Industrial of 8.8%, in HFA Holdings of 8%, and FKP Property Group of 6.8%.

via : http://www.singsupplies.com/showthread.php?t=15452

[zuoom]

West Australian property market in freefall

 THE West Australian property market is being decimated following the evaporation of the resources boom, with values of $1 million-plus properties plummeting 20 per cent and the equivalent of more than two years' supply of homes flooding real estate agencies.

In Geraldton, rents have slumped 8 per cent and in the state's northwest fibro shacks that had been fetching rents of $1000 a week are sitting vacant as formerly high-paid mining executives face widespread retrenchment.

Real Estate Institute of Western Australia deputy president David Airey said there had been just 85 sales in Perth's affluent western suburbs in the three months to December, down from 150 the previous quarter and 300 at the same time in 2007, The Australian reported.

"Properties ... purchased as recently as a year ago have been listed or sold below their original asking price," he said.

Mr Airey said house prices in the state were expected to fall further as the global financial crisis continued to unfold and mining companies retrenched staff.

Adviser Edge head of property research Louis Christopher said Perth house prices were expected to fall by between 8 per cent and 12 per cent this year.
Your Say

    I have a mortgage on a unit and a house in Victoria Park WA. I purchased them both in 2003. Every quarter they have performed brilliantly. Each year gaining between 8% and 22% gr...

(Read More)
Mark from Derby of Derby

"The cause of the falls at the moment is the decline in commodity prices, (the rise in) which is what actually caused the boom in the first place," he said.

According to the REIWA, much of the lower end of the market was holding ground, buoyed by a surge in people capitalising on cheaper homes and a tripling of the first-home buyers grant.

"Properties priced up to $400,000 in areas popular with first-home buyers have either been steady in price or fallen only very very marginally."

In Perth, house prices fell 4per cent in the December quarter, taking the yearly decline to 11 per cent.

The median price of a Perth house was $418,000, down from $473,000 at the peak of the West Australian housing boom in December 2007.

via : http://www.singsupplies.com/showthread.php?t=16133