Inflation

[farmerge]

It wasn't an accident and he's not going to do a great deal about it even now.

Inflation and immigration will run hot so house prices do not drop. You just watch.

Quite happy for house price to stay high and keep rising as we intend to sell the farm in the near future. Tree changers are now moving into the area and their donation will keep She and Me in a lifestyle we are not accustomed to.

 

[qldfrog]

Been noticing in an area a few k's from us that quite a few homes have come onto the market recently, and then a SOLD sign quickly appears. Perhaps a lot easier to buy an existing joint than trying to build, plus then there is the factor in finding a builder to erect the home without going bust.

Already mentioned in another thread but we discarded 3 months ago or so the idea of a bare block purchase due to builder risk so signed instead on an established new home

 

[qldfrog]

A piece of paper with the magci words imprinted on it for the "Lying and Cheating Department"

Or a round metal widget unlocking an ALDI trolley.....

 

[waterbottle]

Services PMI comes in way below estimates, markets plummet, as do rates, markets now thinking the corner might have finally been turned.

Doubt.

I don't think JPowell and crew take notice of PMIs though

 

[JohnDe]

He would never have been in this position if he had not dropped rates below 2%.
Anything below that was going to stimulate nothing but the housing market, as if it needed stimulating at any time.
So what will he do now that the housing has become even less affordable for the new entrants?
Mick

They don't know how to bring housing back to a normal setting.

Economic downturn to accelerate, and banks are worried

After a year of economists forecasting a looming significant slowdown, it’s now happening, and it will gather momentum in coming months.

All Australians who are being impacted by lower spending power are now being forced to make very difficult spending decisions. Similar decisions are being made in the US and Europe. We are not alone.

This downturn is different to any we have experienced in recent decades. Conventional downturns are characterised by rising unemployment and deep fears among employees that “I will be next to lose my job”.

Normally there is a very severe collapse in house prices, but this time around, although they have fallen, the shortage of dwellings has so far insulated the community from much bigger blows.

The 2023 downturn takes place while there is full employment, but real wages after adjusting for inflation have fallen by about four per cent over the last year and almost seven per cent from their peak.

And the standard-of-living fall for those with big mortgages has been severe and is set to get a lot worse as the impact of higher interest rates makes it harder and harder for people to make ends meet.

Australians in all walks of life, but particularly in lower income areas, have spent most of their savings maintaining their lifestyle and are now deciding which areas of expenditure they must cut.

In the last few weeks, some banks have experienced a noticeable increase in those asking for mortgage help.

On the other side, those mortgaged families that have good balance sheets and are worthwhile long-term customers for banks are making the big banks pay for the short-term cost gains they achieved by losing control of their customers to mortgage brokers.

The customer loyalty is to the broker, not the bank, and brokers are now shopping around the banks to gain better deals for good borrowers.

That leaves the banks with mortgagees who are struggling to meet their payments.

Home mortgages have been the great driver of bank profits, but they carried margins that were too high and are now the good performing mortgages are being relegated to a commodity product.

The banks must develop skills to sell mortgage customers a wider range of services.

Fascinatingly, it was fear of this situation developing that led the banks to invest in life offerings, but they did not have the skills to operate them and encountered huge losses on exiting.

The mortgage bonanza papered over this basic bank weakness, at least until now.

In the next few weeks, we will discover whether the Fair Work Commission decides to recover some of the real wages lost by lifting official wage levels sharply.

But if they take that action, the lower inflationary trends that are now emerging will be reversed and interest rates will have to rise even further.

This is a downturn in living standards that has been engineered by the Reserve Bank to force companies to become more efficient and not increase their prices.

Out there in business, land inflation acts like a tax on a vast number of medium and smaller enterprises. The cost of the stock and materials keeps rising, and they have difficulty in recovering those costs via price rises and/or greater efficiency.

But there is an even more serious aspect to this downturn, which I have been documenting in recent days.

Bank regulator APRA has been concerned at the exposure of Australian banks to risks in the construction sector directly in loans to builders and subcontractors and indirectly through mortgage commitments to homeowners who risk having half-finished houses because of builder collapses.

One of the top four banks has virtually stopped lending in the industry, clearly because APRA believes they are too exposed. I have not been told the identity of that bank.

And then there is a second and larger bank that is examining the balance sheets of builders in minute detail before making commitments.

I suspect other banks will have to join them.

We have a credit squeeze taking place on the industry that is our largest employer and covers a wide area of small and medium businesses.

Always remember that there is a significant part of the community whose spending power has not been impacted, and their living standards and spending patterns remain unaltered.

But there is another segment of the community, particularly among young people, who are embracing a lifestyle that involves very little work.

The big Covid-19 handouts established a lifestyle that is now being adapted to current conditions by living at home or in groups.

Mental health becomes a factor both among those living this lifestyle and their parents.

It’s not public yet, but many in government are beginning to consider a combination of the old national service schemes whereby young people serve part-time in the military or are used to bolster the ranks of service organisations covering disasters.

Those ideas may fizzle out, but readers need to be aware of the gathering momentum.

ROBERT GOTTLIEBSEN BUSINESS COLUMNIST

 

[farmerge]

Already mentioned in another thread but we discarded 3 months ago or so the idea of a bare block purchase due to builder risk so signed instead on an established new home

Easy as and no drama or grief with builders

 

[UMike]

Easy as and no drama or grief with builders

Going through this atm. fk'n horrific.

$1,500 to install 2 bathroom heating lights.

 

[Rabbithop]

Quite happy for house price to stay high and keep rising as we intend to sell the farm in the near future. Tree changers are now moving into the area and their donation will keep She and Me in a lifestyle we are not accustomed to.

Watch it farmer! You may become a rolly polly fr the new lifestyles n it's no fun at all!

 

[farmerge]

Watch it farmer! You may become a rolly polly fr the new lifestyles n it's no fun at all!

Just gazing into the future rabbito

 

[Rabbithop]

Going through this atm. fk'n horrific.

$1,500 to install 2 bathroom heating lights.

Yes, it's shocking. When we had our kitchen (a corner single bedroom size) renovated, $45k plus.
2 upstairs bathrooms n a downstairs toilet without shower renovated, it costs more than 40K ...unbelievable, the same style was completed by the same renovator, maybe 5 yrs ago to our friend who recommended him to us was half the cost! They were totally shock for what I had to pay.

 

[wayneL]

Bohemia (ref. "Status Anxiety" by Alain de Botton) has always appealed to us, especially now.

Loving living well below our means. Instead of keeping up with the Joneses it's about realising the Joneses are wankers anyway

Michel de Montaigne wrote about this ~500 years ago.

Apologies if this seems a segue to the thread or somewhat of a tangent, but it is relevant in my opinion.

 

[over9k]

Going through this atm. fk'n horrific.

$1,500 to install 2 bathroom heating lights.

Do some good for the world and donate it to charity instead

(You'd get about two hours)

 

[wayneL]

Do some good for the world and donate it to charity instead

(You'd get about two hours)

Yep, but be aware of the actual benificiaries.

As long as you're comfortable with 90+% going to the executives and operatives.

 

[farmerge]

Yes, it's shocking. When we had our kitchen (a corner single bedroom size) renovated, $45k plus.
2 upstairs bathrooms n a downstairs toilet without shower renovated, it costs more than 40K ...unbelievable, the same style was completed by the same renovator, maybe 5 yrs ago to our friend who recommended him to us was half the cost! They were totally shock for what I had to pay.

rabbito no wonder your money pot is more empty than not.

 

[Dona Ferentes]

Oh dear,

Yep, but be aware of the actual benificiaries.

As long as you're comfortable with 90+% going to the executives and operatives.

Missing the thread, and context, due to being blocked.

Might set up #The Real Inflation

 

[over9k]

Initial & continuing jobless claims come in about 10% above expectations, everything dumps in response.

 

[farmerge]

So many businesses with window signs seeking staff, I wonder about the extent of the people who proclaim to want to work. Is serving behind a counter or working in an area that is not their style just a bit much for them to lower their lofty standards, or is it just that Govt money is just good enough to get by on. To me there seems to be a lot wrong with the "system" and it appears to be "broke".

 

[Smurf1976]

So many businesses with window signs seeking staff, I wonder about the extent of the people who proclaim to want to work.

Thing is though, to what portion of the population are those jobs really available?

The shop will never say it but in truth the real selection criteria to get the job may simply be "good looking young female - others need not apply" and in one go that rules out most of the population. It also means whoever gets the job won't be there too long - it's not a career move, just a job.

Government and some big corporates going through the motions is another. Plenty of jobs get advertised where in all honesty it's a complete waste of time applying because the successful applicant has already been chosen and is already doing the job. It's just ticking the boxes and it's extremely common.

Then there's fake job ads which take it to the next level. They're not just ticking the boxes to permanently employ someone who's already working there casually or to promote someone but they go even further - there is no job at all and no intention of employing anyone.

 

[farmerge]

Thing is though, to what portion of the population are those jobs really available?

The shop will never say it but in truth the real selection criteria to get the job may simply be "good looking young female - others need not apply" and in one go that rules out most of the population. It also means whoever gets the job won't be there too long - it's not a career move, just a job.

Government and some big corporates going through the motions is another. Plenty of jobs get advertised where in all honesty it's a complete waste of time applying because the successful applicant has already been chosen and is already doing the job. It's just ticking the boxes and it's extremely common.

Then there's fake job ads which take it to the next level. They're not just ticking the boxes to permanently employ someone who's already working there casually or to promote someone but they go even further - there is no job at all and no intention of employing anyone.

Smurf all so true, but I do know that the agriculture industry is in dire need of staff. Don't have to be the brightest spark in the fire box, but be diligent, attentive etc.
This sort of work generally starts as a casual, or seasonal job but often leads to a permament one.
Perhaps many are to much city centrified and are frightened that open spaces and fresh air may be detrimental to their health.

 

[over9k]

Take a look at what so many of these places are paying though...