When it comes to house prices, it seems you can’t win

Fri, 26 Oct 2018  |  

This article first appeared on the Yahoo 7 Finance web site at this link: https://au.finance.yahoo.com/news/comes-house-prices-seems-cant-win-210644370.html?soc_src=social-sh&soc_trk=tw 


When it comes to house prices, it seems you can’t win

Australians just love to complain about house prices, whether they are going up or down. 

Some of those expressing concern about rising house prices a year ago are the same ones concerned about them falling now.

When it comes to house prices, it seems you can’t win.

Up until a year ago, there were regular complaints about high house prices. Those high prices were freezing potential first home buyers out of the market, it was claimed, there was vitriolic abuse directed to “baby boomers” who bought their houses decades ago and were sitting on huge price gains and there were notions, admittedly peddled by snake-oil salespeople, that a crash in prices would drag the economy into recession. These comments generally ignored the fact that, according to analysis from the Reserve Bank, affordability and the ability to service a standard mortgage was no harder in 2017 than in the average of the prior 25 years.

This was largely because of record low mortgage interest rates which meant that someone on an average income, buying a median priced house with a standard variable interest rate was paying approximately 25 per cent on their household income on servicing the loan which was the same as the average of the prior quarter century.

Which brings us to now

Since the peak in late 2017, the Corelogic measure of Australia-wide house prices has fallen 4.5 per cent. The falls in Sydney and Melbourne have been larger. Over the same time and even with weak wages growth, household incomes have risen by around 3 per cent which has helped to deliver a clear improvement in affordability.  Mortgage interest rates, a vital element in housing affordability, have been broadly steady with some banks lifting their standard variable rate, but this has been largely offset by the spread of ‘special deals’.

With wages rising, house prices still falling and the RBA firmly on hold with official interest rates, it seems affordability will be supercharged into 2019.  The problem now, according to the house prices worry warts is that the fall in house prices will leave some people with negative equity and will hurt the economy into 2019.

To be sure, some people will have negative equity as prices drop. But in a classic case of ‘so what’, if people retain their job, get the odd promotion and can still comfortably service their mortgage, it means little or nothing in terms of heighten chance of default.

Where the issue is important – and this has nothing much to do with affordability per se, is that it threatens to undermine household wealth and with that, consumer spending.  With household wealth being undermined by falling house prices, even for those would bought their house 20, 30 or 40 years ago, the ability and willingness to ramp up spending is being curtailed.

It is why most sensible economic forecasters are looking for slower growth in Australia into 2019. Falling wealth will curtail spending and when this is most evident, policy makers, including the RBA will likely react with easier policy, which will cushion and downturn.

For housing, the decline is getting close to a bottom.

By the middle to latter part of 2019, cashed up first home buyers will increasingly tap the market and will inevitably provide support to prices. If the RBA eventually cuts interest rates, which is still a good chance, the housing market and with it, the economy, will sail through another year without loosing too much paint on the way through. At the end of the day, house prices do go up and they do go down and there are some winners and losers as this cycle inevitably unfolds from year to year.

For those who were aggrieved at ‘missing out’ on the housing market when prices were elevated a year or two ago, are now rejoicing at the prospect of buying a cheap house with low interest rates at a time when wages growth is starting to pick up.

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Wed, 29 Jul 2020



Covid19 has opened a door for Australians to positively accept significant changes that will lead to a shared good. This rare opportunity enables us to achieve sustainable economic and social goals that create a new ‘normal’ as our way of life.

These Ten Steps are presented as non-partisan recommendations to the Australian Parliament in the firm belief that, if they embrace them, the Australian economy and society will be greatly enhanced after the Covid19 pandemic has passed.

*A job for you if you want one.
A significant increase in part time and casual employment can be created that will enable you to enjoy a more creative and peaceful lifestyle and to live longer and better. The traditional age at which you would have been expected to retire will become obsolete as a result. An access age for pension and superannuation will become your choice. This will enable you to remain in paid work for as long as you want to, on a basis that you choose, while boosting the productivity and growth of Australia.

*You will get wage increases that will be greater than your cost of living.
A demand for enhanced innovative skills at all levels of employment will be created as the economy grows in strength, thereby enhancing your stature in the workforce and enabling executive salaries and bonuses to drop to levels that are accepted as justifiable by employees, shareholders and customers.

The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

Tue, 07 Jan 2020

This article first appeared on the Yahoo Finance web site at this link: https://au.finance.yahoo.com/news/the-governments-test-in-2020-220310427.html   


The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

For many people, the cost of the fires is immeasurable. 

Or irrelevant. 

They have lost loved ones, precious possessions, businesses and dreams and for these people, what lies ahead is bleak.

Life has changed forever.

As the fires continue to ravage through huge tracts of land, destroying yet more houses, more property, incinerating livestock herds, hundreds of millions of wildlife, birds and burning millions of hectares of forests, it is important to think about the plans for what lies ahead.

The rebuilding task will be huge.

Several thousands of houses, commercial buildings and infrastructure will require billions of dollars and thousands of workers to rebuild. Then there are the furniture and fittings for these buildings – carpets, fridges, washing machines, clothes, lounges, dining tables, TVs and the like will be purchased to restock.

Then there are the thousands of cars and other machinery and equipment that will need to be replaced.