Economist's views on Australia

[ramblingboy42]

These are the views and forecasts by possibly Australia's best gathered team of economists.

Interesting that not one of the govt's pre election forecasts , budget and promises match what these EXPERTS believe.
The economy is weak and heading downward - ABC News (Australian Broadcasting Corporation) (https://www.abc.net.au/news/2019-07-01/the-economy-is-weak-and-heading-down-economic-review/11261704)

[Saitch]

I have to say that I'm not all that confident in the future performance of my "Super."[bighmmm]

[NavyDiver]

Economics is a fascinating topic. I always love looking at the 12 month forecasts of 'experts'. Hindsight it is almost always a very humbling experience for almost all who are prepared to tell/predict the future. Shocks from events overseas are possibly a bigger issue that all the huffing and puffing we see locally [biggrin]

152335

[Eevo]

i have a slightly different thinking style. is a "bad" economy something to be "fixed"? should it be the govt's job to "fix" it?

[Pickles2]

Too much waffle & too many variables in that article for me to comprehend.
However, as a mark of my "respect" for it, I see one of the so called & hopefully (I suspect not) unbiased experts are predicting a 12% decrease in the value of Melbourne properties in the next 12 months,...... which I consider ridiculous.
I'm also getting so tired of interest rate decreases "to stimulate the economy",....jeez, if interest rates have anything at all to do with it, with cash rates of 1.5%, if stimulating an economy has anything to do with low rates, and then taking in the historically record low rates we have now, then lower rates ain't never going to stimulate anything.....the REAL drama will occur when they start to go,....UP?
Pickles.
Ya shoulda put this in C.A. Rambling, those boys would have a ball with it.

[ramblingboy42]

i have a slightly different thinking style. is a "bad" economy something to be "fixed"? should it be the govt's job to "fix" it?

If any business or company or organisation openly declares to the public that certain goals or achievements are going to be met , then the general public has every right to believe that they can safely invest in those goals in whatever shape or form they wish it to be. False claims made by businesses and companies are considered to be fraud and dealt with by the legal system . Any gov't and persons representing a government making false claims should be dealt with in exactly the same manner. Accordingly any person should be given an opportunity to rectify their wrong doings.

So, yes Eevo , whomever is responsible for the given situation , should fix it.

[DiscoMick]

I have to say that I'm not all that confident in the future performance of my "Super."[bighmmm]Super is going quite well, probably be in the 7-9% range for most funds, because the share market overall is solid because the big miners are doing well selling iron ore to China, which is spending on infrastructure to combat Trump's tariffs, and record gas exports which have made us the top gas exporter.
The real worry is the domestic economy, which is in the toilet for several reasons, some political and so unable to discussed outside Current Affairs.
We decided earlier this year we were in a domestic recession. Measured by per capita GDP we are already in recession. Take out government infrastructure spending and we are in recession.
Causes include stagnant wages, over-priced housing in Sydney and Melbourne and the 30,000 cut to immigration, which has reduced consumer demand for housing, food, clothing, education, cars and other consumer spending.
We have just finished a full revision of our transition to retirement plan to cope with the undeclared recession. Sadly, I think I will have to work longer, as will The Navigator. Plans to hit the road have been deferred.
Oh well, at least I should be able to afford more accessories for George the Defender.

[Eevo]

If any business or company or organisation openly declares to the public that certain goals or achievements are going to be met , then the general public has every right to believe that they can safely invest in those goals in whatever shape or form they wish it to be. False claims made by businesses and companies are considered to be fraud and dealt with by the legal system . Any gov't and persons representing a government making false claims should be dealt with in exactly the same manner. Accordingly any person should be given an opportunity to rectify their wrong doings.

So, yes Eevo , whomever is responsible for the given situation , should fix it.

i think you missed my point. i would like to see a smaller govt that doesnt run or interfere with the economy.

[Bigbjorn]

i think you missed my point. i would like to see a smaller govt that doesnt run or interfere with the economy.

Well, before you sack them, get them to fix interest rates. Get interest rates back up where they should be to boost investor's confidence and incomes. Long term bank deposit rate should never be less than 10%. I don't care about borrowers. Pay up and shut up. You are using other peoples money and have to pay a fair price for this privilege.

[donh54]

The real sufferers are, IMO, the poor beggars who have fallen for the biggest confidence trick of all. Namely that you can only be financially secure if you buy a house.
We are in the process of divesting ourselves of house, land, mortgages and rates, not to mention insurance.
Setting ourselves up for a mobile lifestyle, working as and where we need to.

[ramblingboy42]

Noel Whittaker in Making Money Made Simple, gives perfect examples of people choosing not to invest in a home with its ongoing costs , and instead renting their home and reinvesting their money in alternative markets.

The end result over an extended period can be very interesting.

[DiscoMick]

Yes, but once you reach pension age you don't want to be paying rent. That's about secure housing, which is a different topic to the investing.
Super is making much more from investments in the share market and other sources than interest on loans is costing, interest rates are falling and housing values are likely to keep falling until next year, so currently housing is not the best choice.
Super funds were averaging 6.5% to the end of May, which was about 4.5% above inflation, but below the decade average of 9%. The share market rose in June. Meanwhile house prices and mortgage rates are falling. So super is a better investment than housing.
So, we have deferred paying off a mortgage and are leaving the money in super to be invested for us.
And I've just signed the paperwork to increase my income by $14k, so that should carry us through until housing starts rising again.
Downside is my retirement is deferred. Oh well...

[Eevo]

Meanwhile house prices and mortgage rates are falling.

depends where you are. apparently my suburb has gone up in price.

[DiscoMick]

Yes, there are variations. Sydney and Melbourne are the worst, Brisbane hasn't dropped as much, but there is a glut of units depressing prices. Investors are holding back unless they get a major bargain. Some developers are unloading sites. We are trying to sell an investment site zoned for 8 storeys at the moment, but it's the wrong time to sell.

[DiscoMick]

Jan's husband works full-time, but they'll have a mortgage into their 70s
New financial year, same financial worries keeping Australians up at night - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/2019-07-02/the-financial-concerns-keeping-australians-up-at-night/11267778)

[DiscoMick]

Most people underestimate where they stand in the income stakes. They are richer than they think. Poorer people are more realistic than richer people. Most people underestimate how much inequality there is in Australia.

Our income test showed most people don't know their place
We asked people to guess their place on the income scale. They weren't very good at it - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/2019-07-02/income-inequality-australians-dont-know-their-place/11161124)

[Eevo]

Most people underestimate where they stand in the income stakes. They are richer than they think. Poorer people are more realistic than richer people. Most people underestimate how much inequality there is in Australia.

Our income test showed most people don't know their place
We asked people to guess their place on the income scale. They weren't very good at it - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/2019-07-02/income-inequality-australians-dont-know-their-place/11161124)


high income and being rich are not the same thing though.

in other news, RBA drops the cash rate. imho, if they wanted to kick start the economy, 0.25 drop isnt enough.

[DiscoMick]

They should have cut interest rates last year, but they were unrealistic about the real situation in the domestic economy. Then they felt unable to cut leading up to the elections to avoid being accused of being political, when actually it was their refusal to cut then which was political.
How many people have lost their jobs as unemployment has risen because of the failure to cut interest rates last year?

The RBA cuts interest rates again. How low will they go?

The RBA cuts interest rates again. How low will they go? | Stephen Koukoulas | Opinion | The Guardian (https://www.theguardian.com/commentisfree/2019/jul/02/the-rba-cuts-interest-rates-again-how-low-will-they-go?CMP=Share_AndroidApp_Copy_to_clipboard)

[Eevo]

They should have cut interest rates last year,


agreed. too little too late.

[Bigbjorn]

Interest rates are virtually zero. Well below inflation. What is needed is to restore investor confidence to get the economy moving. A government with the political guts to get interest rates moving upwards, upwards, upwards until investors are receiving a fair rate for the use of their money. Interest Zero ? Or minus? rates below 2%!!!!!! Just what rate is required to encourage business? Jesus, they are borrowing money for nothing now.

What about the poor home buyers the bleeding hearts will ask. Well, the home buyers need to work and save a decent deposit, 25% to 40% of purchase price. They will then have some equity in their purchase when things go bad. Stop buying flash new cars, overseas trips, renters full of expensive electronics, live and save hard like previous generations had to. A couple with two incomes? Well, save ALL the largest wage and save the other. You will have your houdse deposit in a few short years.

Borrowers are receiving the privilege of using other peoples money and should have to pay a fair price for this privilege.

[Bigbjorn]

Interest rates are virtually zero. Well below inflation. What is needed is to restore investor confidence to get the economy moving. A government with the political guts to get interest rates moving upwards, upwards, upwards until investors are receiving a fair rate for the use of their money. Interest Zero ? Or minus? rates below 2%!!!!!! Just what rate is required to encourage business? Jesus, they are borrowing money for nothing now.

What about the poor home buyers the bleeding hearts will ask. Well, the home buyers need to work and save a decent deposit, 25% to 40% of purchase price. They will then have some equity in their purchase when things go bad. Stop buying flash new cars, overseas trips, renters full of expensive electronics, live and save hard like previous generations had to. A couple with two incomes? Well, save ALL the largest wage and live off the other. You will have your house deposit in a few short years.

Borrowers are receiving the privilege of using other peoples money and should have to pay a fair price for this privilege.

[Eevo]

25% to 40% of purchase price.


40% in syd is 400,000.


average syd wage is 68k.
assuming can save 40k per year, will take 10 years.
unrealistic

[DiscoMick]

I read about a Sydney bloke with a good job who wanted to borrow $1m to buy a house and was told he'd need a deposit of $250,000.

[Eevo]

I read about a Sydney bloke with a good job who wanted to borrow $1m to buy a house and was told he'd need a deposit of $250,000.

he's locked out of the market.

also with syd being a falling market, there is a higher risk, and he's paying for that in his deposit.

[DiscoMick]

Yes, that's why our oldest son, who lives in Sydney, has instead bought an investment house on the Gold Coast.

[Bigbjorn]

I read about a Sydney bloke with a good job who wanted to borrow $1m to buy a house and was told he'd need a deposit of $250,000.

A fairly reasonable ask by a responsible lender.

I bought my first house in 1970 on a gross single income of around $75 per week which was a good earn at the time. House was $14000. Bank wanted $5000 deposit and sufficient to cover legals and stamp duty. Try saving $5000 (nearly two years net wages) on a net wage of around $60 per week. The bank that I had been with since boyhood flatly rejected my application. They said I was not earning enough to service the loan. I worked overtime, overtime, and overtime, and put everything into the mortgage. Owned it by 1975.

[Pickles2]

A fairly reasonable ask by a responsible lender.

I bought my first house in 1970 on a gross single income of around $75 per week which was a good earn at the time. House was $14000. Bank wanted $5000 deposit and sufficient to cover legals and stamp duty. Try saving $5000 (nearly two years net wages) on a net wage of around $60 per week. The bank that I had been with since boyhood flatly rejected my application. They said I was not earning enough to service the loan. I worked overtime, overtime, and overtime, and put everything into the mortgage. Owned it by 1975.
I think we may be on the same page...."Put everything into the mortgage"?.....So did we!
Home ownership has always been very important to me, my Mum & Dad never owned a home, & when Dad passed away, Mum & I could've ended up on the street, were it not for a kind friend. I never wanted to be in that situation again, and so bought a house & paid it off as soon as I could.
We had to have a similar deposit to you & rates were around 7-9%, can't remember exactly. I would not want to be renting upon my retirement.
I quite agree with Banks asking for sizable deposits, jeez on the one hand the do-gooders hammer the banks for being too easy, then when they tighten up, the same do-gooders are now having a go for the very opposite reasons!!
I remember when I was young, if ya wanted to buy a car on hire purchase ya had to have a minimum of 25% deposit.
People complaining today need to "harden up",....home buyers & anyone else saying they "need more relief" with still lower interest rates etc are talking nonsense, imho of course.
Credit today, is still far easier to obtain than when I was young, we had to endure far higher interest rates, up to 18% when a particular Govt was in power, .....not saying conditions today are perfect,..when are they ever, but I reckon they're pretty good at the moment.
Pickles.

[donh54]

40% in syd is 400,000.


average syd wage is 68k.
assuming can save 40k per year, will take 10 years.
unrealisticSimple solution - don't live in Sydney! [biggrin]
If people stopped paying ridiculous prices for housing that they can't afford, the market will come down.
Having 1.2 kids? Why need a 4 brm house. We had 7 kids in a 3 brm house - Mum and Dad (and baby, for a while) in one room, boys in one, and girls in the other.
How many bathrooms do you need? Given that each one has a similar maintence and water cost as a medium sized swimming pool, you can save lots, apart from the initial price of the house.
The house we're looking at selling is over a hundred years old, four bedrooms, one bathroom, sundeck, various sheds, on a full 1/4 acre, two blocks from a medical centre, three blocks from primary school, five blocks from high school. 10 minutes walk to town centre.
After we've finished tarting it up a bit, it'll be on the market for a bit under $250k
Plenty of work available, freshwater fishing and bush walking, 4wd parks etc.
Who needs a big city?

[DiscoMick]

People want McMansions nowadays.

The first new house we owned and lived in (our first house was a rental investor we never lived in) cost $50k, 3 beds, one bathroom (which leaked). Mortgage hit 16.5% at one stage. We survived.

[ramblingboy42]

My son is purchasing a really nice home from Coral, 26squares on 540sqm.

Funny thing , the land costs more than the house.

It's all good assuming that houses are going to prop up the govt , but it ain't gonna happen this time round.

I have a friend who is an economist who says the current economic problems are easily solved but the gov't just won't listen to people like him.....there are reasons why.

[DiscoMick]

Yes, I also have a friend who is having a Coral house built on his land. Good value for money. But it's not a McMansion.

[superquag]

My heart bleeds for the current crop of youngsters, facing an impossible battle to save up and buy with less than TWO percent interest rates...
Me and the Missus lashed out some 40 years ago, with a $32k 3x1 house of barely 11 squares. Being a scrooge, I paid out extra to lock our variable rate to a ceiling of .....
- 11%. [bigsmile]

Very glad we did, for when the rates topped out at 17 %, we were nearly paid off. About 12 years ago (after they dropped down to sanity.) we extended / doubled the area. Cost us another $30K to do it. Few more years of paying extra...and its ours, lock, stock and barrel.
My first and last new car was.... the HX runout.

[edddo]

What! You mean it is possible to not live in Melbourne and Sydney and constantly bemoan the property prices? You wouldnt know that from media coverage. It is a very limiting discourse for anyone “trapped” in the cities. A bit of meaningful regional development incentive would be useful. And from a vic perspective that should not be limited to Ballarat, Bendigo and places within cooee of Melbourne.


Simple solution - don't live in Sydney! [biggrin]
If people stopped paying ridiculous prices for housing that they can't afford, the market will come down.
Having 1.2 kids? Why need a 4 brm house. We had 7 kids in a 3 brm house - Mum and Dad (and baby, for a while) in one room, boys in one, and girls in the other.
How many bathrooms do you need? Given that each one has a similar maintence and water cost as a medium sized swimming pool, you can save lots, apart from the initial price of the house.
The house we're looking at selling is over a hundred years old, four bedrooms, one bathroom, sundeck, various sheds, on a full 1/4 acre, two blocks from a medical centre, three blocks from primary school, five blocks from high school. 10 minutes walk to town centre.
After we've finished tarting it up a bit, it'll be on the market for a bit under $250k
Plenty of work available, freshwater fishing and bush walking, 4wd parks etc.
Who needs a big city?

[DiscoMick]

Lotta Sydney people have given up on Sydney and are buying in the regions, particularly SE Qld.

[ramblingboy42]

yes, they seem to love the 3-400sqm blocks with 25sq homes stacked on them.....

[DiscoMick]

They're affordable. What's not to like about a $200,000 four bed, two bath, two garage plus land cost? Land is more expensive than the house itself.

[Pickles2]

yes, they seem to love the 3-400sqm blocks with 25sq homes stacked on them.....
Correct, and there's places in Victoria with the same recipe,....and I would definitely not want to live there.
Pickles.

[Bigbjorn]

At risk of repeating myself, we need to develop an economy that is not based on selling houses to each other. An economy based on value adding to our natural resources and primary produce then exporting the products. There needs to be much more manufacturing in Australia. Only manufacturing can provide the large numbers of low skill jobs to employ the 800,000 or more unemployed and disability pensioners with a capacity to work.

[RANDLOVER]

At risk of repeating myself, we need to develop an economy that is not based on selling houses to each other. An economy based on value adding to our natural resources and primary produce then exporting the products. There needs to be much more manufacturing in Australia. Only manufacturing can provide the large numbers of low skill jobs to employ the 800,000 or more unemployed and disability pensioners with a capacity to work.

It's called the "Resource Curse" and basically it says that a country blessed (cursed) with natural resources does not invest in education and training for it's people, nor in manufacturing as it is just too easy to dig stuff up and export it. Also the best and brightest are attracted away from government and politics, which ends up in a dearth of good policy. Resource curse - Wikipedia (https://en.wikipedia.org/wiki/Resource_curse)

[4bee]

Economics is a fascinating topic. I always love looking at the 12 month forecasts of 'experts'. Hindsight it is almost always a very humbling experience for almost all who are prepared to tell/predict the future. Shocks from events overseas are possibly a bigger issue that all the huffing and puffing we see locally [biggrin]

152335


It is as though common sense & gut feeling plays no part in all that waffle.[smilebigeye]

[ramblingboy42]

It's called the "Resource Curse" and basically it says that a country blessed (cursed) with natural resources does not invest in education and training for it's people, nor in manufacturing as it is just too easy to dig stuff up and export it. Also the best and brightest are attracted away from government and politics, which ends up in a dearth of good policy. Resource curse - Wikipedia (https://en.wikipedia.org/wiki/Resource_curse)

good example Naurau

[Homestar]

Economics is a fascinating topic. I always love looking at the 12 month forecasts of 'experts'. Hindsight it is almost always a very humbling experience for almost all who are prepared to tell/predict the future. Shocks from events overseas are possibly a bigger issue that all the huffing and puffing we see locally [biggrin]

152335

As the joke goes - There are 2 types of economists. Those that can’t predict global economic trends and those that don’t know they can’t predict global economic trends.

[4bee]

Saw a bloke from Deloitte being interviewed on SKY this a.m., waffling on & on & on ad infinitum. [bigsad] I'm lookin' at this bloke & thinking I bet in 6 months time all your bollocks won't mean a thing & you will feel embarrassed amongst your peers because the world would have changed & you are alarming the population for nought, but dribble away mate.