Growing debt proves to be no safe bet – hence caution

Growing debt proves to be no safe bet – hence caution

Without a shadow of a doubt this week identified itself as the worst “Bad News Week” since negativity crept then swept world markets in August 2007. Culminating yesterday with the share market falling 2.53 per cent based on economic uncertainty and high oil prices shadowing stocks. No doubt there will be many eyeballs glued to the share market today trying to fathom investment strategies, given the collective sentiments that suggest we have worse to come. With interest rates at twelve year highs, the records that our markets keep identifying are records for all the wrong reasons which today resonate throughout the financial markets. Consumers are feeling the brunt of record high costs of fuel, food and rents which begs the (unanswered) question, how much ‘slow’ do we need before we start to grow again?

Already we are seeing caution being thrown to the markets with economists predicting flat property markets for the remainder of 2008. Total housing finance fell by 3.0 per cent in April (economists predicted 1.9 per cent) which is self explanatory given the sudden impact of the disturbing and increasing associated costs of living. So much so, that although fixed rates are offering lower interest rates than the variables, the consensus is that borrowers are changing direction and are now punting on a Reserve Bank of Australia (RBA) actual rate reduction over the next twelve to twenty-four months. Fixed rate loans accounted for 17.5 per cent of all home loans executed in April, which was down from 23.9 per cent in March. Over the last three months, new home loans have declined by 18.4 per cent (another new record) yet we continue to experience rising immigration levels.

So we now have consumer sentiment at sixteen year lows with the Westpac-Melbourne Institute index which fell 5.6 per cent in June, to 84.7 index points. This index now finds itself at the lowest level since December 1992 and today, for five months in a row, it has come in under 100. In support of house prices, the soaring cost of fuel is having a detrimental effect. The Australian weighted average for houses and other dwellings, recorded its largest quarterly fall, compared to previous quarters for the past five years. Only Sydney and Perth boast a median price above $450,000. In 2007 just over 1.5 million people claimed rental deductions in their respective tax returns. Just 170,000 people claimed rental tax deductions for the first time which further highlights our rental crisis.

So try and work out the findings of the Independent Pricing and Regulatory Tribunal. It suggested this week, that the incompetent “Dilemma Government” introduce a ‘congestion’ tax calling for an overhaul of payroll tax, changes to property transfer taxes and insurance levies. Our esteemed Treasurer, “Cost – ya Plenty”, supported a number of these recommendations, such as abolishing stamp duty on caravans. Somewhat ironic, as this is where his tax policies are sending families. New dwelling commitments were 59,265 in March with the Housing Industry Authority suggesting that they need to be between 175,000 – 180,000.

It was announced this week, that Sydney dropped one place and is now acknowledged as the world’s 10th best city. Dropping one place from last year, one can only assume that the judges started at Circular Quay waiting for a train that never turned up. They then decided to catch a ferry to Manly which broke down and whilst boarding a back-up ferry, sprained an ankle. They then waited six hours to be treated, only to be advised that bandages had run out and band aids would have to do.

Watch the RBA carefully as it continues to struggle for ideas, with inflation on the rise (a fact and reality) and wages, rent, petrol and food all accelerating the situation. Australian employment fell in May for the first time in nineteen months. Therein lies a clue!

Markets change – so do sentiments, which prompted us to engage the services of Peter Ricci and his team from www.agentpoint.com.au to build, deliver and design an industry first, super real estate website which we will launch in the coming months. With an emphasis on SEO (Search Engine Optimisation) to guarantee that we remain at the forefront of Google search criteria where each and every update is immediately uploaded into this search engine. Throw in 390 + “Virtual Realty News’ editions that will subsequently be optimised to Google which will be approximately 322,665 key words (and counting) which is why we have a habit of referring to Mosman real estate.

Not hard to work out just who is “Numero Uno” with SEO in Mosman real estate search criteria and still getting stronger! Search engine optimisation is a somewhat new concept in real estate that delivers amazing online results. With $766,742,000 online sales, it is no wonder we continue to establish new boundaries and lead this online market. Cheers ^__^

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