I.R. Laws will crash the housing market

I reckon this will be the the straw that breaks the camels back

If you look at the collective union agreements, the bargaining power gained workers the largest pay rises and the best working conditions.

Then came the AWA's, these have gain workers half the amount of wage rises than what collective agreements achieved.

....and now we have the I.R laws handed down, which have effectively stripped workers of up to 30% of their take home wages.

OK so now we have take home wages on thier way down, house prices in almost all parts of Australia stable or on their way down, global higher interest rates and record fuel prices.

get my drift....care to comment?

Stop_the_clock said:

I reckon this will be the the straw that breaks the camels back

If you look at the collective union agreements, the bargaining power gained workers the largest pay rises and the best working conditions.

Then came the AWA's, these have gain workers half the amount of wage rises than what collective agreements achieved.

....and now we have the I.R laws handed down, which have effectively stripped workers of up to 30% of their take home wages.

OK so now we have take home wages on thier way down, house prices in almost all parts of Australia stable or on their way down, global higher interest rates and record fuel prices.

get my drift....care to comment?

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Don't think it would matter what happens in that respect. Houses were way over priced 5 years ago. Gullible people have got themselves and the housing market way into debt. Blaming it on AWA IR etc, is just a flimsy excuse.
It all comes down to greed. Wantabes wanting to live an extravagent lifestyle with minimum effort and in the shortest time possible. No sympathy.

Think your still missing the point though....

Of course houses were over-priced 5 years ago, but wage rises were also better over the past 5 years than they will be in the future. Hence the reason people borrowed to the limit, as they knew that their union would push for that 4%+ pay rise per year, and then some.

There is only so much money to go around, and from this point on there will be much less.

Mass sackings are taking place, workers re-employed on lower wages will certainly collapse what was an already unsustanable market.

Those real estate agents are going to be mighty busy over the next few years errecting "for sale" signs for houses that will just not sell

I understand what you are saying. but you have average Joe, sucked in by a bigger wage, buying lots of investment properties expensiove cars etc etc, because he thought the party would never end. Too bad basicially. As for estate agents they will still make their money selling properties.

Half the people out there touting property were taking advantage of younger people who have never see a recession let alone know what one is. Oh well, lifes a learning curve, 10% interest rates not that far away IMHO.

As a builder and an employer.

The housing or any market is driven by demand.
Believe it or not so are wage earners wages.

Shortage of trades means higher wages--demand exceeds supply.
Shortage of good people means those worth keeping DEMAND and are OFFERED better wages--demand exceeds supply.

The mentality that you have no control over your wages is EXACTLY the reason you dont have any control over your wages!

Re expensive housing (Or more to the point percieved expense.)
Contrary to popular belief I was once 21 and a first home buyer.
I paid $30,000 for my first home.
My wage was $27 a week.
If I could allocate all my wage to paying off the home then it would have taken 1111 weeks.
Today the average wage for my people is $800.
In the same area of my first home the average price is $270,000.
To do the pay off calculation--thats 337 times an average. wage.

Worse off then or now???--- by the way interest rates were 9.5% at the time.

Half the people out there touting property were taking advantage of younger people who have never see a recession let alone know what one is. Oh well, lifes a learning curve, 10% interest rates not that far away IMHO.

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Where do you get that from??

The economic drivers were that it was way cheaper to buy an established home than it was to build. Replacement costs were in many cases 1.5 x the purchase price of the home.
Interest rates were at a 30 yr low and rents exceeded out goings---so positive gearing was a given in just about any purchase.
So there was an inbalance,demand increased,supply dried up prices rose to meet demand. ( Houses came on to the market as sellers made profits they rolled over into better homes).

Where do you get the idea that we will see a recession?
Aust has a very strong economy,lowest un employment for years,low inflation,decreasing deficit,low interest rates,high demand for goods from high demand emerging economic neighbours.

Todays youth are in the position to take advantage of a new golden era---dont watch it pass you buy!

Hence the reason people borrowed to the limit, as they knew that their union would push for that 4%+ pay rise per year, and then some.

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They borrowed to the limit for the same reason everyone else did---they saw an opportunity.
Those that came on to late bleat like wounded sheep and those who got on early you wont hear a peep out of!
If you or anyone have to rely on a union to increase your wages then your probably not worth your wage in the first place!!

All my people are up to 30% over any award---why because I want to keep great people,they produce 50% + better than those who complain and dont take control of THIER lives.
Those that underperform dont last more than a week or so---I dont sack them ---MY STAFF DO! They dont want brain dead/slackers earning the same as they do!!!!!

Mass sackings are taking place, workers re-employed on lower wages will certainly collapse what was an already unsustanable market.

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This is the exception rather than the norm.What you will get though is brain dead slackers wont be able to hide behind union enforced saftey nets any more.To hold a job they will actually have to perform.
If you perform there is no way other than economic hardship for your employer---that you will be moved on.
If the above happened then the employer isnt concerned if you dont take the offer.
I'll guarentee its not offered across the board to EVERY employee---only those not worth/earning their wage.

Dont tell me you havent come across a few of those in your time either!!
Why should the company bludgers get as much as those who take pride in the effort they put into their employment?

You're paying your tradies 800$ a week? I'm surprised you've got anyone working for you!! No offence.

Its Adelaide not Sydney.
Thats NETT after tax,and they are predominantly Excavator operators,labourers.
Top site supervisor take home pay $1100.

Trades are normally self employed.Carpenters/Brickies.

crackaton said:

You're paying your tradies 800$ a week? I'm surprised you've got anyone working for you!! No offence.

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Hey Crackton, I read Tech's post to say "people" not "tradies" and then "average $800" which could mean that there are some juniors or casuals in the mix bringing the average down somewhat.

Also he states that "All my people are up to 30% over any award" - interesting how people can interpret posts so differently

Anyone care to guess what wage a licenced (Avionics)aircraft maintenance engineer, who certifies for maintenance on Qantas aircraft should be on???

This will be a gradual process over time...when employees start work within new companies, or change jobs/careers.

Like the saying goes....it won't happen overnight, but it will happen.

And yes at the moment, the mass sackings are a minority, but given half a chance I reckon most employers over time will reduce take home wages, afterall they are in the business of making money.

I totally agree that some industries are screaming out for new employees and will pay well above the average rates to retain workers, but in the long-term for the fair majortity of companies, they will have an endless line of workers ready to fill the gaps at a lower rates of pay.

It will be the Woolworths, the Coles, the Myers, the Mcdonalds, the KFCs the Pizza Huts. It will be the resturants, the cafes, the pubs, the clubs, the bars. and so on and so forth, each one over the long-term, placing workers on a flat hourly rate, that in real terms is and will be less that that of the worker of today.

And yes the down-turn in the housing market/the mining industry and alike will come, eventually too, and with that will see these industries doing the same too.

With no unions, no collective bargaining powers etc time will tell who will be the winners and the losers.

I reckon the companies will gain larger profits, and exploit the work-force, just a matter of time.

and again...

....it won't happen overnight, but it will happen.

wanty said:

Anyone care to guess what wage a licenced (Avionics)aircraft maintenance engineer, who certifies for maintenance on Qantas aircraft should be on???

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My brother is one, and he has worked for Qantas on a wage of $80,000 per year. Base salary is about $50,000, with shift work/penalty rates making up the other $30,000

Stop_the_clock said:

My brother is one, and he has worked for Qantas on a wage of $80,000 per year. Base salary is about $50,000, with shift work/penalty rates making up the other $30,000

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Probably know him,such a small industry.
Does he think the company is going to try and shaft us??
Bet you he'll think about working in Europe when CASA brings us in line with EASA SYSTEM.

wanty said:

Probably know him,such a small industry.
Does he think the company is going to try and shaft us??
Bet you he'll think about working in Europe when CASA brings us in line with EASA SYSTEM.

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He jumped ship, probably at the right time and is now working for Singapore Airlines.

But he did tell me that mass sackings are and have been taking place within Qantas, and now more work is being done off shore at a reduced wage. It is not a pretty sight within qantas. If I was you I would wait for the redundancy package, I am sure its not too far off.

...and I bet your bottom dollar Qantas will experience its first major crash within a few short years and many lives will be lost, at the cost of saving a few bucks

I sort of lucked out myself a few years earlier by taking a full redundancy from Ansett a few years before they fell over.Had been with Qantas for 2yrs when Ansett broke.
Sounds like ya bro worked in heavy maintenance at Qantas or was he at line maintenance??

Ya right about something maybe going down at Q soon.All they want is more profit at any cost.
Is ya bro avionics or mechanical??
What sort of wages and lifestyle does he enjoy in Singapore???

I've thought for quite some time (since 2003) that the housing market is a ticking time bomb just waiting to go off. It's simply over valued to the point where it doesn't stand up as an investment except by relying on the notion that values (as opposed to prices) will forever rise.

That's like buying a stock with a p/e of 30 on the basis that you expect the p/e to keep rising. Nice while it lasts but odds are that at some point it will come back to a more normal valuation. Same with housing.

Bottom line IMO is that house prices are supported by the global flood of cheap credit and the ability and willingness of ordinary people to access that credit. If the cheap money stops then so does the real estate party. The global trend is now very much towards stopping that flood of cheap money with interest rates rising in numerous countries, "excess liquidity being mopped up" in Japan, bank reserve requirements being tightened in China etc.

As for IR reform, the major effect is likely to be in on the willingness of people to borrow. If even 5% of the workforce becomes concerned about future cuts to wages then their reduced willingness to borrow ought to tip the balance in the real estate market in favour of buyers. If media reports are any guide then it's going to affect more than 5% of the workforce.

Just looking at actual house prices (Hobart) it seems that:

1. Average prices for houses actually selling have slowly risen over the past couple of years.

2. Prices for the SAME house or one very similar in the same suburb have fallen slowly in nominal terms.

3. The reason for the mismatch in the above is due to a near total lack of unattractive properties on the market. Those who don't have a high quality property to sell seem to have largely given up trying to sell or are transforming it into a better property (renovation) first. End result is that the average quality of houses on the market has improved, hence the rise in average prices whilst prices for the same standard of house are falling.

As for the overall state of the economy, impact of IR reforms, interest rates, fuel prices etc, I think a good measure is how willing people are to spend on non-essentials with no lasting value. For example, holidays. It's no secret that the tourism industry is in a slump at the moment...

All that said, I agree totally with tech about better employees being valuable and getting better pay than slackers etc. But markets are made at the margin and I don't see this situation applying to 90%+ of workers any time soon.

All Im going to say is RUBBISH!

It will be the Woolworths, the Coles, the Myers, the Mcdonalds, the KFCs the Pizza Huts

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Im employed at one of the companys you mentioned on a part time basis working over the weekends (which is less then desirable for some) fri-mon.
A couple of days after the reforms came in they approched me (and a few others) wanting us to sign a contract, I asked the questions I needed to ask (without the need for a union to be involved as Im not a member) and I ended up getting extra hours on sat & sun with penalty rates still included.
So lets add this up:
I work 4 days a week or 25 hours (taking out lunch breaks) I still get penalty rates and everything else I had before the contract, etc...So the decision was not hard for me to make after doing the maths, I earn just less then a full time position.
To contradict your story even more, I have been able to get a loan for a house because of this!

As for Kim and his unions, hmmmm, bunch of trouble making idiots! Sure they do some (and I mean some in a minimal way) good things but 99% of the time they just cause trouble IMO. I must also mention that I once joined the CFMEU when I was in construction... NEVER EVER AGAIN. Heres the story, my employer (at the time) was ripping me and my workmates off, personally they owe me about $1100. The CFMEU came in and signed a number of people up saying they could help us if there were enough members etc. To cut a long story short they screwed us all over in the end. At $230 a pop per member joined they made a small fortune off of us, which I belive was put towards the scare tactics that you see on TV, flyers, blah blah blah, not to mention our good "save us all" mate kim. It really makes me wonder how many people have been ripped off by unions in order to get a bit of cashflow going for their scare tactics of late???
If it was anyone else they would be labled a con, which is exactly what I think they are, a bunch of crooks that line their own pockets, protecting themself first and foremost! not their members.
Below is a post that I put up in a recent thread which describes how low unions are willing to stoop in order to line their own pockets/protect THEIR job security.

the CFMEU (construction Union) had told contractors on a building site "not to pay workers" for 4 hours pay in which those employees were collecting donations for a work mates family as that work mate had recently passed away.
The independent enquiry also found that this had been done by the CFMEU in order to get more publicity for the unions/labours your rights at work campaign.
How sick, they basically used someones death in order to gain publicity

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I would also like to add that the CFMEU still sends me info/scare tactic letters even though I have not been a member for over 2 1/2 years, they also try to bill me. From memory they wanted another $500-700 in fees all for a service I no longer want or need.
:swear:

Basically the market will sort itself out, and if your not smart enough you'll get left behind. If you want to talk about wages falling then think about what will happen once that happens. People will spend less. Demand for most things will fall. Therefore the price must also fall. I live in perth and the housing prices have been rising substantially for some time, so much that there was a report on people leaving perth to live in tasmania where prices are lower. What effect does this have? Demand will fall and the price will reach an 'equilibrium point'. I have no empathy for the people fall behind. Everyone makes choices and you cannot blame other people for your failings. Granted, there are exceptions where some people cannot possibly have achieved any more than where they are currently at. But the majority just make poor decisions such as not saving, not investing, not educating themselves, not studying etc. The number of families that I see on the news complaining that the government doesn't do enough to support them when they have gone and had 5 children is ridiculous. For them to go and blame the government is not good enough and they should take the responsibility of supporting themselves on.

Anyway enough of that rant lol. Back to the housing market. If it crashes, so what. Prices will fall. People who have made all their money by investing in property should have diversified. In the end people will get by, and you cannot expect good times to last forever.

MattThomson said:

Basically the market will sort itself out, and if your not smart enough you'll get left behind. If you want to talk about wages falling then think about what will happen once that happens. People will spend less. Demand for most things will fall. Therefore the price must also fall. I live in perth and the housing prices have been rising substantially for some time, so much that there was a report on people leaving perth to live in tasmania where prices are lower. What effect does this have? Demand will fall and the price will reach an 'equilibrium point'. I have no empathy for the people fall behind. Everyone makes choices and you cannot blame other people for your failings. Granted, there are exceptions where some people cannot possibly have achieved any more than where they are currently at. But the majority just make poor decisions such as not saving, not investing, not educating themselves, not studying etc. The number of families that I see on the news complaining that the government doesn't do enough to support them when they have gone and had 5 children is ridiculous. For them to go and blame the government is not good enough and they should take the responsibility of supporting themselves on.

Anyway enough of that rant lol. Back to the housing market. If it crashes, so what. Prices will fall. People who have made all their money by investing in property should have diversified. In the end people will get by, and you cannot expect good times to last forever.

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Woahh. step back. You advocate people not having kids? I applaud any family that can stick together and have 5 or more kids in this country. Well done.

MattThomson said:

Basically the market will sort itself out, and if your not smart enough you'll get left behind...

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Basically agreed with that post although I must point out that a large portion of those under age 30, and practically all those under 25, never had a chance to buy property before the boom. They were either studying, new to the workforce with no savings, taking their parents advice and saving etc. I'm concerned about the social implications for these people if the market doesn't crash at least in real terms.

Personally, I see it as just another trade. Sell when it's over valued and do something else with the money. If you deduct the cost of rates, insurance, maintenance and the constant renovations needed to keep pace with the "average" house (ignoring of which significantly overstates returns from residential real estate) then, in most parts of Australia, even cash has done better in recent times. WA has been a notable exception but I have no doubt that it will fall into line with the rest of the country in due course. WA doesn't exactly have a land shortage...