Government bribes for first-home buyers to buy new properties are dangerous
What if the GFC is permanent? Well, permanent is a tad over the top, although I do agree with IMF chief economist “that the world would not recover from the financial crisis until at least 2018”. When we look at our home front today, we see Australia’s growth straight jacket given the peaking of the mining boom and historically low interest rates, which will result in increased debt in our housing markets. There is no mistaking we are in an entirely new business world where unemployment will increase as businesses engage and employ cheaper alternatives via the internet.
A classic example service sector crunched as jobs go overseas – over the last four years, 80,000 service sector jobs have left our shores. Thanks to the internet, businesses are faced with re-inventing themselves in order to remain competitive. Once upon a time, all a business required was an effective business model; however today, this business model must be paralleled with the online model. Capturing consumers is now based on electronic ingenuity where the focus has moved to electronic media. Our means of communicating are no longer home grown as our society now communicates through imported overseas products – namely Google, Apple and Samsung.
Australia Post bows to online shopping revolution and is about to open hundreds of 24-hour a day parcel lockers where purchasers will be sent a PIN code that will enable them to retrieve their respective purchases at a time to suit and not have to queue at a Post Office.
Last week, I made comment that Australia should be charging GST on online purchases over $100. Australian retailers securing more of the online retail pie: CommBank. “With the debate over online GST still raging, the CBA points out imposing GST on purchasers above $100 would hit 57% of online transactions, against 4%.”
The IMF warns recession risk ‘alarmingly high’, which is fair comment, considering that world trading has slumped. The volume of goods being shipped around the world increased just 3.2%, after growth of 5.8% last year and 12.6% the previous year. Now we’re talking just businesses and not taking into account the vast majority of governments across the globe that are drowning in debt as they wallow in budget deficits.
A few weeks ago I suggested to Virtual Realty News subscribers that we will be going to the polls in March 2013 because I believe it would be suicide for the Gillard government to call an election after it delivers the 2013 budget fiasco. Why we need an early election “two rumours have been aired in the past week that one can only hope are true – that the midyear economic and fiscal outlook (MYEFO) will be released earlier than usual, and that a snap election will be held in March of next year. Both these decisions are made by the government, and the ring of truth to the rumours stems from the fact that without these decisions being taken, Labor is likely finished.” Remember where you read it first.Click to enlarge
As the mining boom ends, the housing boom begins so in conjunction with a record-low cash rate (which possibly go lower) throw in yet another first-home buyer scheme. On October 1, NSW introduced a package of measures aimed at delivering around $35,000 to first-home buyers of new dwellings priced at or under $550,000. With new construction collapsing in recent years, incentive bribes to purchase new properties are dangerous, when history shows it is much like buying a new car – drive it from the showroom and it depreciates 20%. Australia will have a cash rate of 3% forever.
Now we are seeing home buying sentiment surges to highest level in three years: Westpac Melbourne Institute Index, which also coincides with investors leaving the ‘shock’ market rising rental yields to draw investors back to housing. Again on the flip side, we are observing record in high house rents could force families into flats, which is a classic case of governments telling constituents what they are doing internationally. What about rent rises to outpace house growth over next two years: NAB.
Once upon a time it was all about home grown. Australia has enormous housing issues, yet our leaders are more intent on debating sexism, text messages, speeches and prostitution on social media.
Australia’s politicians are more concerned about re-election and distractions via social media and are not addressing the hard (real) social issues that confront our country.Click to enlarge
Good news for Mosman sellers as stock levels are well down on volumes compared with this time last year. School holidays are now over, and it is somewhat surprising to see a minimal increase in the number of houses on the market in Mosman this week. Unlike many other markets, Mosman appears to have very little interest in selling.
Robert Simeon is a director of Richardson Wrench Mosman and Neutral Bay and has been selling residential real estate in Sydney since 1985. He has also been writing real estate blog Virtual Realty News since 2000. The RWM real estate model has sold in excess of $1 billion in database sales globally.
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