A Taxing Issue That’s All Greek To Me!

A Taxing Issue That’s All Greek To Me!

Finally the EU leaders reach deal on bailout fund where the big banks will be forced to take a fifty per cent haircut on Greek Bond holdings. The Eurozone bailout fund will be leveraged to 1 trillion euros under deals thrashed out by the continent’s leaders during all night talks in Brussels. We are now nearing the end of October 2011, yet European leaders registered their concerns on the rise of sovereign debt in France, Ireland and Greece in April 2009. That’s 31 months ago!! Greece currently has a debt of 350 billion euro ($466 billion) and this deal will allow Greece to reduce its debt by 100 billion euros ($133 billion).

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One blog comment I read summed up the European crisis “The countries that have suffered do have one thing in common (Iceland, Italy, Greece, The US all have this): a desire to have first – world services and a first – world infrastructure, but without paying first – world taxes for them. Consequently, it’s been politically unviable to either raise taxes because people think they can maintain their current levels of govt service and infrastructure by cutting around the edges in welfare. Or, accept a lower grade of service/infrastructure because they’ve been told that they can have a low tax without actually cutting any serious expenditure. Hence, irreversible deficit and exploding debt. I’m not a fan of the GST, but I’ll agree that it did the job it was supposed to do – it created a large body of tax revenue that isn’t under constant political pressure to be cut, protecting Australia from the disastrous belief that you can have something for nothing and just cut taxes each election without harming the national infrastructure.”

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.BUY PRINT

The world’s greatest treasurer Wayne Swan says households still doing it tough– the man is a genius! The consumer price index (CPI) rose by 0.6 per cent in the September quarter, for an annual rate of 3.5 per cent. The average of the Reserve Bank of Australia (RBA) trimmed mean and weighted median inflation measure was a 0.3 per cent rise in the quarter for an annual rate of 2.45 per cent.

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Macquarie Economics Research offered the following commentary.

  • Headline consumer prices rose by 0.6% in Q3, but the Reserve Bank‘s preferred measure of underlying increased by just 0.3%QoQ.
  • Looking in more detail at the sectoral drivers of inflation in Q3 it is now clear that we are starting to see the sharp rise in fresh food prices after the Queensland and Victoria floods. Overall, food prices fell by 0.2% in Q33, but are still 6.4% higher than a year ago. Fruit prices are still 64% higher than a year ago. Clearly, food prices will fall much further in 4Q11 and 1Q12. Health care prices were the other broad category to record a decline in prices, but this was consistent with similar falls in Q3 in 2010 and 2009.
  • On the flipside, the much discussed surge in utilities bills certainly came through as expected. Together with the lift in local government rates and another solid rise in rents (up 1.2%QoQ and 4.6%YoY) this meant that overall housing costs increased by 1.9%. Of course, as utility bills only increase once a year, this component should record a much more modest rise in Q4.

This would explain carbon tax opposition grows: Newspoll where opposition to the tax jumped six per cent to 59 per cent and support for the tax has fallen four points, to 32 per cent.

More Sydney home owners and renters in housing stress than any other capital – Sydney has the highest number of renters as well as the highest percentage of mortgage holders at risk of falling into poverty. More than 106,000 people who rent in Sydney face difficulties meeting the basic cost of living, according to Housing Costs through the Roof a report compiled by the National Centre for Social and Economic Modelling at the University of Canberra on behalf of Australians for Affordable Housing.

Brisbane wins housing race to the bottom as the national medium home price has now fallen for five successive quarters. Grey clouds gather over housing market although the good news is that Sydney house prices to recover from next year: ANZ.

Property buyers should factor in – it’s a boom, baby, as births hit a new record Australian women have rewritten the history books by giving birth to 297,900 babies last year, a new national record, the Australian Bureau of Statistics (ABS) reports. On the flipside we have apartment construction to slump in 2012: Industry survey. Turnover generated from the construction of new apartments grew by 2% for the 2010-11 year, but forecasts to fall by 1.2% over 2011-12 before picking up by 4.8% over 2012-13. So rents will continue to climb through the roof which explains why the Gillard government refuses point blank to address housing affordability.

NSW in slow lane of new economy a study by the National Centre for Social and Economic Modelling shows that one in ten Australian households – 850,000 – spend so much on rent or mortgage payments they have little left over for other bills. A rate cut won’t rescue the market so I (yes a real estate agent) don’t believe that the RBA should cut the cash rate when they meet on Melbourne Cup day. Such a move would send a negative message that our economy is trending downwards and that would severely impact consumer confidence. We have to toughen up and not rely on artificial stimulation.

Yesterday we saw the ASX incur four hours offline, due to a computer glitch which when resolved at 2.00pm saw our markets close up two per cent higher due to the European announcement of Greece’s bailout.

    MOSMAN – 2088

    • Number of houses on the market last week – 133

    • Number of houses on the market this week – 148

    • Number of apartments on the market last week – 86

    • Number of apartments on the market this week – 103

    CREMORNE – 2090

    • Number of houses on the market last week – 15

    • Number of houses on the market this week – 18

    • Number of apartments on the market last week – 36

    • Number of apartments on the market this week – 34

    NEUTRAL BAY – 2089

    • Number of houses on the market last week – 17

    • Number of houses on the market this week – 18

    • Number of apartments on the market last week – 83

    • Number of apartments on the market this week – 92

For this week’s sales in Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate – Click Here

Listings in Mosman peaked this week and should we see this number reduce in the run up Christmas, then market forces are engaging. If not, this will definitely happen in 2012. The next six week’s will be most revealing.

Cheers ^__^

5 Responses to “A Taxing Issue That’s All Greek To Me!”

  • Ann says:

    I understand the power companies are seeing a surge in power usage after 10pm, when the lower rate kick in, and that many households are using more between 10pm and 7am than they are in peak periods. Looks like dishwashers, washing machine, dryers and pools are being set to operate in these hours.

  • Hotly Spiced says:

    I’d love an interest rate reduction. If the RBA does reduce interest rates on Melbourne Cup Day I promise I won’t say I’m feeling less confident.

  • The vast majority are locked into fixed with a small variable component so if there was a reduction the benefit would be negligible.

  • Gordon says:

    Robert, it’s good to hear that you acknowledge how fortunate we are to have the genius of the world’s greatest treasurer running our defic-, er, economy.

    Anyone who in 4 years turns an $11Bn budget surplus into an expected deficit of $57Bn, in the middle of our biggest mineral boom, is clearly a brilliant performer.

    And it makes us realise what a sluggard Peter Costello must have been; he came into office with Keating government debt of $96Bn plus a deficit of $8Bn, and left office as above with a budget surplus of $11Bn, having repaid all the debt and also created the Future Fund.

    References to PIIIGS (Portugal, Italy, Ireland, Iceland, Greece, Spain) highlight the fact that ‘progressive’ governments cannot ignore the need to balance budgets any more than can individuals. Sooner or later, it all seems to end in tears!

  • Ann says:

    I know retail foot traffic is terrible, so obviously sales are down. It you are not in staples, you will be feeling the pinch. Fortunately we are a staple of sorts!!

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