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Are falling house prices masking something more worrying?

Wed, 29 Jun 2016

This article first appeared on the Yahoo7 Finance website at this link: https://au.finance.yahoo.com/news/house-prices-are-falling-232920240.html 

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Are falling house prices masking something more worrying?

For Australia as a whole, the fall is small, at just 0.2 per cent in the March quarter according to official data from the Australian Bureau of Statistics.

This nationwide picture masks something a little more worrying across a number of cities which are showing more significant price falls. This means some buyers are risking negative equity in their house, which means that the value of the mortgage is larger than the value of the property.

In Perth, where the unemployment rate has almost doubled over recent years, the ABS data show housing prices falling 4.8 per cent since the peak in the first half of 2014. Prices are now back to the level of early 2013 meaning that those who have bought a house in the last three years in Perth have either only just broken even – at best – or have lost money.

Australia must be ready to pump cash into the economy if Brexit bites

Wed, 29 Jun 2016

This article first appeared on The Guardian web site at this address: https://www.theguardian.com/business/2016/jun/27/australia-must-consider-fiscal-stimulus-if-brexit-crisis-hurts-the-gobal-economy 

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Australia must be ready to pump cash into the economy if Brexit bites

Brexit is important for Australian policymakers. Whichever side wins the 2 July federal election will need to have policy pragmatism to deal with the potential fallout.

With the British people electing to permanently destroy their wealth, incomes and living standards by voting to leave the European Union, global economic risks have intensified. One only has to witness the savage reaction in financial markets as it became apparent the “Leave” vote was winning.

There were several trillion dollars of value lost to global stock markets, the yield on government bonds fell to never-before-seen levels and currency markets went into meltdown, with the British pound dropping more than 10% to reach its lowest level since 1985.

Australia will not be immune from the fallout from the Brexit vote.